Causes of Boom and Bust Cycles
Boom and bust economic cycles involve:
- Rapid economic growth and inflation (a boom), followed by:
- A period of economic contraction / recession (falling GDP, rising unemployment)
Causes of Boom and Bust Cycles
1. Loose Monetary Policy
If monetary policy is too loose, it means real interest rates are too low given the state of the economy, e.g. UK economy in late 1980s. This will cause excessive growth in the money supply and economic growth to be above the long run trend rate.
February 28, 2012
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Posted by Cameron OSullivan
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Its so easy to get caught up in all the romance and love in the air surrounding Valentines Day. Everyone should want to make their significant other happy. Nothing wrong with that. Cupid. Candy.
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