Chapter 36
History of Business Cycles and Human Misery
LEARNING OBJECTIVES
Discuss how and when business cycles began and how business cycles have spread over
the whole world.
OUTLINE OF CHAPTER
I. The Unemployment Rate
II. Spread of the Business Cycle
III. History of Unemployment in the U.S. Economy
KEY TERMS
business cycle
an expansion in economic activity (measured by indicators such as output, employment, and
profits) followed by a contraction in economic activity (including declining production,
unemployment, business losses, and bankruptcies)
contraction
downward turn in the business cycle
ANSWERS TO END OF CHAPTER REVIEW QUESTIONS
Discuss how and when business cycles began and how business cycles have spread over the
whole world.
1. What is a business cycle? What is an expansion, and what is a contraction? How are
they measured?
2. When and where did the modern business cycle begin?
3. Who loses from recessions and depressions?
4. What do employees lose?
5. What do corporations lose?
6. Does the official unemployment rate tell the whole story about how much
unemployment exists?
7. What other points must be considered?
Give examples of expansions and recessions throughout history and explain the effects that
are common to all recessions.
8. Were there recessions or expansions in pre-capitalist societies? Explain.
9. What is the largest recession of the twentieth century? What were some of its most
significant effects? How did this recession differ from other recessions that followed?
The largest recession of the 20th century was the Great Depression of the 1930s, which