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Business Cycles
Economic growth is not a continuous process. Superimposed on the long-term trends are short-term fluctuations in the levels of economic activity and\or in growth rates. These upswings and downswings are of varying duration and intensity and are referred to as 'cycles'. Governments attempt to smooth out these fluctuations with the use of contra-cyclical monetary and fiscal policies. The latest developments in macroeconomic thought regard business cycles as the central (if not the only) problem of macroeconomics.
use a graph of the classical labour market to illustrate the effects of a real wage existing in the market that is lower thhan the equilibrium real wage
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Question 3 (44 marks) Please note that this question requires substantial research. A summary from the text book is not sufficient. To score well you will have to consult several a
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