tailieunhanh - Ebook Macroeconomics (6th edition): Part 2

(BQ) Part 2 book "Macroeconomics" hass contents: Business cycles; classical business cycle analysis - market clearing macroeconomics; keynesianism - the macroeconomics of wage and price rigidity; unemployment and inflation; monetary policy and the federal reserve system,.and other contents. | • u S l n ess C s an • acroeco n o m l c • o IC CHAPTER • • • u S l n ess c es ince the Industrial Revolution, the economies of the United States and many other countries have grown tremendously. That growth has transformed economies and greatly improved living standards. Yet even in prosperous countries, economic expansion has been periodically interrupted by episodes of declining production and income and rising unemployment. Sometimes fortunately, not very often these episodes have been severe and prolonged. But whether brief or more extended, declines in economic activity have been followed almost invariably by a resumption of economic growth. This repeated sequence of economic expansion giving way to temporary decline followed by recovery, is known as the business cycle. The business cycle is a central concern in macroeconomics because business cycle fluctuations the ups and downs in overall economic activity are felt throughout the economy. When the economy is growing strongly, prosperity is shared by most of the nation's industries and their workers and owners of capital. When the economy weakens, many sectors of the economy experience declining sales and production, and workers are laid off or forced to work only part-time. Because the effects of busi­ ness cycles are so widespread, and because economic downturns can cause great hardship, economists have tried to find the causes of these episodes and to deter­ mine what, if anything, can be done to counteract them. The two basic questions of (1) what causes business cycles and (2) how policymakers should respond to cyclical fluctuations are the main concern of Part 3 of this book. The answers to these two questions remain highly controversial. Much of this controversy involves the proponents of the classical and Keynesian approaches to macroeconomics, introduced in Chapter 1 . In brief, classical economists view busi­ ness cycles as generally representing the economy's best response to .