Download 9 - Stephen Kinsella

Economics for Business Week 9 Worksheet
Concepts we covered in class:
1. GDP/Real GDP
2. Inflation, Unemployment, Cyclical Output Gap
3. Business Cycles
Chapters covered: chapters 16 and 17.
Questions for discussion
1. Draw a typical business cycle. Where do you think Ireland is in this
cycle, and, in groups, outline what set of steps do you think the
economy must take to get back to full employment and peak economic
activity.
2. Is the statistical end of a recession the same as the end of a recession
in the real economy? If not, why not?
3. What makes a person ‘unemployed’ in the eyes of the government?
Questions for review
Quarter
Real GDP
(millions of euros)
1
400
2
500
3
300
4
200
5
300
6
500
7
800
8
900
9
1000
10
500
Plot these data points, and identify the four phases of the business cycle. Give a
theory that may explain the cause of the observed business cycle. What are some
of the consequences of a pro- longed decline in real GDP? Is the decline in real
GDP from €1,000 million to €500 million a recession? Discuss possible ways in
which this economy might recover.