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Week 7 - 8

This document discusses the business cycle and its key components. It defines a business cycle as periods of economic expansion and recession shown through fluctuations in GDP over time on a graph. Peaks indicate maximum economic activity (expansion) while troughs reflect minimum activity (recession). The length of a business cycle is measured from peak to peak or trough to trough. It also outlines different indicators that track the economy, such as leading indicators that predict future activity, coincident indicators that change with current output, and lagging indicators that reflect past performance. Finally, it notes that business cycles can be caused by factors inside or outside the economic system.

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Mmapontsho Tshabalala
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105 views6 pages

Week 7 - 8

This document discusses the business cycle and its key components. It defines a business cycle as periods of economic expansion and recession shown through fluctuations in GDP over time on a graph. Peaks indicate maximum economic activity (expansion) while troughs reflect minimum activity (recession). The length of a business cycle is measured from peak to peak or trough to trough. It also outlines different indicators that track the economy, such as leading indicators that predict future activity, coincident indicators that change with current output, and lagging indicators that reflect past performance. Finally, it notes that business cycles can be caused by factors inside or outside the economic system.

Uploaded by

Mmapontsho Tshabalala
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Week 7-8:BUSINESS CYCLE

Learning outcomes
What will you learn about in this topic?

Explain the time series composition

Phenomenon of the business cycle

Reasons for the business cycle

Effects of the business cycle

BUSINESS CYCLE

A business cycle can be illustrated using a graph that shows


the amount of the economic activity(GDP) each year for a period
of years.

A business cycle is basically defined in terms of periods of


expansion or recession.

Business cycle Cont

TYPICAL BUSINESS CYCLE

Business circle cont


The amount, or level, of output is shown on the vertical axis.it is
clear from the graph that the business cycle follows a pattern. The
output rises and falls over time.
The high point of the cycle are called the peaks. These are the
maximum levels of economic activity reached at a specific time.
The lowest points are called the roughs. These are minimum levels
of economic activity reached at a specific time. The period (or
length0 of a business cycle is the number of years it takes the
economy to get from peak to peak or from trough to trough.

Business cycle Cont

Phenomenon of the business


cycle
INDICATORS OF ECONOMIC ACTIVITY
The business cycle shows us what is happening to a countrys
output over time. South African reserve bank has developed
economic indicators that provide answers to these question

Leading indicators-tells us where the economy is going.

Coincident indicators-change at the same time as the quantity


of output changes. Changes in the indicators tell us what is
happening to the quantity of output produced by the economy at
present.

Lagging indicators-shows where the economy has been


REASONS FOR BUSINESS
Reason can be caused by an exogenous or endogenous variable
CYCLE
Business cycle Cont

Exogenous variable is one that acts on a system from the outside


Endogenous is one that works from inside the system.

Thank you

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