Tuesday, January 11, 2011

Post 17

Mr. Campbell asked us to find and post three graphs or charts that explain the theory of business cycles. Explain the strengths and weaknesses of each. Name and give an award to the "best" business cycle.   Explain why you chose the one you selected in 4-6 sentences.

Strength- Everything is in equilibrium (sine curve), recoveries and recessions are equal length.
Weakness- Long recession, but not a steep drop.

Strength- GDP looks very high at the peak.
Weakness- Big drop in GDP during recession, longer time to recover, than to go into recession.

Strength- Output gets higher everytime the company reaches its peak.
Weakness- Longer time to recover from trough because graph is going continuously rises over time.

I think that the third graph is the best. I believe this because every recession takes about the same time to recover from. And during every recession the level of output goes up. Which is the same for every recovery, in which the total output gets higher and higher as the company reaches its peak.

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