Question

Looking at the business cycle and seeing how the economy and labor fluctuate over time and dont remain consistent, are there any long run trends over the past 20-30 years that have been consistent? What are these trends and what do they imply about the state of the economy in the future? Use statistics and evidence to support your view.

Answer 1

Business cycles lead to fluctuations in both the nominal and real variables of the economy. The macro economic variables of the economy, like , Gross Domestic Product growth rate, unemployment rate, inflation rate , level of real interest rates etc have shown cyclical fluctuations in the economy and have been moving up or down in response to the business cycle.

Thus, in future it can be stated that none of the variables of the economy will remain stable and there will be fluctuations in these real variables value depending on which part of the business cycle we are currently in. Thus, long run trend shows that none of the variables in the economy have remained stable in the business cucles andf the value fluctuates/.