Saturday, 4 June 2011

How does GDP and unemployment change during a business cycle? (10 pts!!)?

I%26#039;m trying to write an essay about how unemployment and GDP both change during a business cycle, and I can%26#039;t find anything on the internet to help me understand this topic! lol. Can anyone help me, maybe give me a link to a good website or tell me what you know about this? plzzzz :)|||During a business cycle, that%26#039;s when there%26#039;s a re election coming soon or something like that, if an economy is in a recession (which means high unemployment), government will increase spending. The intuition behind this is: as the government increases spending there will be an increase for the demand for goods. As the demand for goods increases unemployment will decrease (because more labor is needed to meet demand for goods.) Another channel is as the demand for goods increases, output increases which increases GDP overall.