Assignment:
Essay
Step 1:
I am choosing the Second Business Cycle who' Peak occurred in October 1860 and Trough occurred in June 1861.
Beginning Date of Expansionary phase is December 1858 and Ending date is October 1860 for a total duration of 22 months.
Beginning Date of Contractionary phase is October 1860 and Ending date is June 1861 for a total duration of 8 months.
a) Shortest Business Cycle Peak occurred in January 1920 and Trough occurred in July 1921 for a total duration of 28 months. Also, one more cycle with same duration is occurred. Its Peak occurred in July 1981 and Trough occurred in November 1982.
b) Longest Business Cycle Peak occurred in March 2001 and Trough occurred in November 2001 for a total duration of 128 months.
Step 2
20th Business Cycle that occurred from Nov 1927 to March 1933 is the worst or severe business cycle because here the ratio of Contractionary period to Expansionary phase(It measured the steepness of the decline) is 43/21= 2.05 is the maximum from the given 33-business cycle.
More measures like GDP measure (Contraction Period-Expansion Period), or the period of maximum contraction will help us to determine the severe business cycle.
More Information like Periods of Unemployment, Production, Sales, Income, Inflation etc. which are Economic Indicators helps us to determine the worst Business Cycle. For e.g. From the Unemployment Period data, we can determine the period in which % Unemployment ishighest or like Production was lowest.
OVERVIEW:
We will be discussing business cycles in our next class. Please read both ciheats. You will be asked to answer two questions on the handout in preparation for our class discussion. Please type your answers up and submit them at the beginning of class on Tuesday. After our class discussion, you will have an essay assignment to complete based on the handout.
ASSIGNMENT:
Read the first two pages of the handout on U.S. business cycles by Christina Romer, a National Bureau of Economic Research (NBER) economist and professor at University of California, and review the section on "The Business Cycle" in chapter 27 of the textbook. Now take some time to carefully examine the chart on U.S. business cycles published by NBER, pages three and four in the handout, along with the accompanying description on how to read the empirical information presented in the chart (pages five and six in the handout). This material provides you with three sample questions and instructions on how to find the answers to those questions in the data. Use these questions to test whether you are reading the chart correctly.
Step one: working with the historical data on us business cycles. (to be completed before we meet as a class.)
The NBER chart covers 150 years of U.S. economic history. During this time period, the U.S. experienced 33 business cycles. Take one business cycle of your own choosing. Identify its peak and its trough. What are the beginning and end dates of its expansionary phase? Calculate the same (i.e., start and finish dates) for its contractionary phase.
A. Now find the shortest business cycle in U.S. history. What was the date of its peak?
Its trough?
B. Find the longest business cycle. What are the beginning and end dates of this cycle?
What was the length of its expansion? The length of its contraction?
*Please type up your answers and hand them in at the beginning of class on Tuesday (November 9h).
Step Two: In Class Group Exercise
Working in groups, come to a consensus as to which of the 33 business cycles in U.S. history is the "worst" business cycle. Explain your choice. In your explanation, identify the criterion (or criteria) you are using to rank business cycles.
A. What other information would help you to determine which business cycle is the most severe? Explain how and why this additional data would be useful to you.
Step three: essay assignment to be completed after class.
Now consider the information at the bottom of the NBER handout on U.S. business cycles. This section of the handout provides two sets of data:
i) The average length of a business cycle over the entire historical period (covering 33 business cycles). Three pieces of information are provided: the average duration of the contractionary phase of a business cycle, of the expansionary phase, and of the full business cycle.
ii) The average length of a business cycle for each of three sub-periods: the period up through WWI, the interwar period through WWII, and the post WWII period. The same three pieces of information are provided for each sub-period.
Using these data, please answer the following question: Has the performance of the U.S. economy changed over time as indicated by the behavior of its business cycles? Please explain carefully. Be sure to state your claim (yes or no) and defend your answer by using the empirical evidence. Your intended audience is another student in Economics 101, who has just learned about business cycles in their class, but has not been introduced to any of the empirical data on the U.S. economy. They are curious to learn more about the history of the U.S.
economy.
You are welcome to include a visual presentation of the data in your answer. (A visual presentation can help to communicate your message.) Your essay will be evaluated based on its persuasiveness: i.e., how well your claim is supported by the data you present, and how well you explain your answer to the intended audience.
Requirement: Your essay should be no more than 500 words (roughly two pages) and type-written.