Discussion of Changes of Unemployment over the Business Cycle

Business cycles are usually defined as repetitive expansions of activity in the frames of economy. The level of unemployment is used in order to measure of the actual number of people looking for jobs and not being able to find them. Business cycles and unemployment are closely related to each other and at the same time they are both influential for the ability of the business to expand the business operations. Business cycle is measured with the help of GDP and unemployment. When GDP rises, then the level of unemployment decreases during the expansion phase, correspondingly the reverse process takes place during the recession periods. As soon as the cycle starts the economy is expected to go through four periods: expansion, peak, contraction, trough. During the expansion phase in the business cycle, cyclical unemployment reaches maximally low level. The unemployment rate can not be zero as there is frictional and structural unemployment. “Economists consider the sum of frictional and structural unemployment to be the normal underlying level of unemployment in the economy, or the natural rate of unemployment. Economists disagree on the exact value of the natural rate of unemployment, and there is good reason to believe that it doesn’t remain constant over long periods of a decade or more.” (Hubbard 433). There are four categories of unemployment: frictional, which is seasonal unemployment, structural, which happens because there is a discrepancy between the job skills and the actual requirements of jobs and cyclical, which is caused by recession in the business cycle. “The natural rate of unemployment is the normal rate of unemployment, consisting of structural unemployment and frictional unemployment. The natural rate of unemployment is also sometimes called the full-employment rate of unemployment.” (Hubbard 449) Overall, the changes of the unemployment rates during the business cycle could be explained due to various reasons, affecting the concrete type of unemployment.

References:

Hubbard, R. G. Essentials of Economics,  5th Edition. Pearson, 20160323. VitalBook file.

The terms offer and acceptance. (2016, May 17). Retrieved from

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"The terms offer and acceptance." freeessays.club, 17 May 2016.

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"The terms offer and acceptance." freeessays.club, 17 May 2016

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"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]
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