Garrett Risinger 69050
Course: BAM 223
Unit 4
2. Explain how unemployment changes over the business cycle. Why do these changes occur?
Unemployment changes and the business cycles are interrelated, they both have to do with the ability and willingness of a business to increase their operations. The unemployment level of an economy is a measurement of the people that are not working but are seeking a job without success. A business cycle is a repetitive expansions and contractions of the activity in an economy. When an economy is doing good a business can grow and they will need to hire more workers for the increase of business. However, when the economy is contracting the business has to reduce some of its revenues so they end up having to lay off some of their workers. Some businesses that have not yet seen any recent decreases in revenue but the analysts predicts that there will be a future decrease in the general economy they may stop hiring or even start laying off workers to prepare for the loss. By doing this it allows the company to not have as much loss when the decrease does happen. There is an exception for some companies, when the economy is in a slump they actually will react with job …show more content…
This can happen when a surge of people get new jobs and then accrue debts because they think they will have the job for a long time. However, if they lose their jobs shortly after starting leaving the economy in worse condition than before, because there is now more people with debt that they cannot repay. In some cases an economy with lower levels of unemployment volatility but higher than average unemployment levels may be in better shape than an economy with a higher levels of unemployment volatility but low than average unemployment rates. The volatility of unemployment directly correlates with the volatility in the business
Course: BAM 223
Unit 4
2. Explain how unemployment changes over the business cycle. Why do these changes occur?
Unemployment changes and the business cycles are interrelated, they both have to do with the ability and willingness of a business to increase their operations. The unemployment level of an economy is a measurement of the people that are not working but are seeking a job without success. A business cycle is a repetitive expansions and contractions of the activity in an economy. When an economy is doing good a business can grow and they will need to hire more workers for the increase of business. However, when the economy is contracting the business has to reduce some of its revenues so they end up having to lay off some of their workers. Some businesses that have not yet seen any recent decreases in revenue but the analysts predicts that there will be a future decrease in the general economy they may stop hiring or even start laying off workers to prepare for the loss. By doing this it allows the company to not have as much loss when the decrease does happen. There is an exception for some companies, when the economy is in a slump they actually will react with job …show more content…
This can happen when a surge of people get new jobs and then accrue debts because they think they will have the job for a long time. However, if they lose their jobs shortly after starting leaving the economy in worse condition than before, because there is now more people with debt that they cannot repay. In some cases an economy with lower levels of unemployment volatility but higher than average unemployment levels may be in better shape than an economy with a higher levels of unemployment volatility but low than average unemployment rates. The volatility of unemployment directly correlates with the volatility in the business