Business Cycles

Business Cycles

ECO 550

University of Phoenix

December 05, 2010

Business Cycles and Monopolistic Competition

The US economy, along with the world economy has been going through its worst recession since the Great Depression. The recession that started in December 2007 is in its 21st month now, and still going strong. The second quarter GDP numbers that were released earlier in August seemed to suggest some hope of stabilization and an eventual end of the recession. The following table presents some of the salient features of the economy during the last six months:

|Month |Unemployment Rate |Consumer Price Index |Inflation Rate |Real GDP Growth |

|January |7.6 |211.143 |0.3 |-9.7 |

|February |8.1 |212.193 |0.4 |-1.1 |

|March |8.5 |212.709 |-0.1 |-4.3 |

|April |8.9 |213.240 |0.0 |0.8 |

|May |9.4 |213.856 |0.1 |0.9 |

|June |9.5 |215.693 |0.7 |-3.3 |

Table 1: Select US Economic Indicators, 2009 (U.S.Economic Accounts, 2010)

As can be seen from the table the unemployment rate has been consistently rising during the period, and it has seen the total number of unemployed rise by about 3 million people! That is a substantial number by any standards. This has had an impact on...