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Business Cycle Process

Business Cycle Process

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Published by Taresa Farfan
The National Bureau of Economic Research (NBER) considers GDP to be relatively less accurate as a primary indicator of the business cycle.

http://www.researchomatic.com/Business-Cycle-8295.html
The National Bureau of Economic Research (NBER) considers GDP to be relatively less accurate as a primary indicator of the business cycle.

http://www.researchomatic.com/Business-Cycle-8295.html

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Categories:Types, School Work
Published by: Taresa Farfan on Jun 06, 2014
Copyright:Traditional Copyright: All rights reserved

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06/06/2014

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Economic growth is not a constant phenomenon that relies on some fixed variables, rather it depicts a variable pattern, that is given below:
 
An increase of the above average growth
 
The high point- peak
 
A decrease of the below average growth
 
The trough- low point When the economic growth reaches the trough, it is then followed by an increase or expansion, and then the cycle repeats albeit not in a regular or constant manner. The business cycle refers to these fluctuations in the economic growth. To understand this phenomenon, see the diagram below:
The Indicators of Business Cycle:
Aggregate economic activity is related to the business cycle. Because of this reason, one of the most popular indicators of business cycle in United States is Gross Domestic Product (GDP). Generally, two consecutive quarters with negative GDP growth are considered by financial media for indication of a recession period. For this purpose GDP is often used as a simple and quick indicator of economic contractions. The National Bureau of Economic Research (NBER) considers GDP to be relatively less accurate as a primary indicator of the business cycle. The main reason for this is the fact that GDP is frequently revised and then is reported on quarterly basis (whereas the business cycle is analyzed on monthly basis). However, the indicators that NBER considers primary are as follows:
 
Industrial production
 
Employment
 
Personal income

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