Question

4. One of the goals of macroeconomic policy is to reduce the severity of business cycles.

Answer 1

A. In a business cycle there are ups and downs. When there is a peak or a high business is booming and employment is high, unemployment is down and inflation is high.

B. We have to bear in mind that there are four kinds of unemployment: structural, frictional, cyclical and seasonal. Structural unemployment is caused by the type of production and rules of an economy that govern whose abilities are valued in the market so it is not so realated to the business cycle. frictional unemployment is linked with changing jobs ( workers are moving or searching for better opportunities) so this is not so related to the business cycle. Cyclical unemployment is related to the change in the GDP (Gross Domestic Product) so it is related to the business cycle, Seasonal employment is associated with changes in the season so it is no so related to the business cycle.