assignment eco2023

KOLEJ PROFESIONAL MARA BANDAR MELAKA

Course: Macroeconomics
Course Code: ECO2023

STUDENT’S NAME ID NO. CLASS
NUR ATHIRAH BINTI SAMAD BMF20-07-024 DBF3A
NUR AIN SYARA BINTI ARMAN BMF20-07-025 DBF3A
NURAZNITA HANY BINTI MOHD. BMF20-07-031 DBF3A
AZLAN
MOHAMAD ZULHAKIMI BIN BMF20-07-008 DBF3A
MOHAMAD NASIR
NUR ‘AQILAH NAJIHAH BINTI NASRON BMF20-07-029 DBF3A
LECTURER’S NAME :
GROUP : MADAM HADRAH HANUM BINTI RAMLEE
DATE :
GROUP 1

26 MARCH 2021

a) DEFINITION OF A BUSINESS CYCLE AND PHASES.

A business cycle refers to the regular fluctuation in economic activity in an economic as whole.
The term business cycle refers to economy-wide fluctuations in production or economic activity
particularly regarding national income, employment, and output over several months or years. It
is also known as trade cycle or economic cycle and looks like a wave fluctuating in aggregate
output such as rises for a while, then falls over time.

PHASE 1 - PEAK

Referred to as an expansion, boom, or upswing of economy. When there is an expansion of
output, income, employment, prices, and profits, there is also a rise in the standard of living.
There is an upswing in the economic activity and economy reaches its peak. This also called as
a boom period. A peak is when business activity reaches a temporary maximum with full
employment and near-capacity output, where all available resources are employed. The
unemployment remains low, strong consumer confidence about the future leads to record
purchases, and business expand to take advantage of marketplace opportunities. More
investments coming in and increase the pressure on available resources. This leads to situation
where the number of jobs is more than the number of workers, thus leading to increase in
prices, wages, interest, and profit.

PHASE 2 - RECESSION

The turning point from prosperity to depression is termed as a recession phase. During
recession period, the economic activities slow down. When demand starts falling, the
overproduction and future investment plans are also given up. There is steady decline in the
output, income, employment, prices, and profits. Generally, recession lasts for a short period.

PHASE 3 - TROUGH

Referred to as depression, contraction, or downswing of economy. The trough is the bottom of
recession period. During this time, the economic slowdown continuous in downward spiral over
an extended period. There is a continuous decrease of output, income, employment, prices, and
profits, thus causing a fall in the standard of living and depression to set in.

PHASE 4 – RECOVERY

-The turning point from depression to expansion is termed as recovery or revival phase. During
the period of revival or recovery, there are expansions and rise in economic activities. When
demand starts rising, production increases and this causes an increase in investment. There is
steady rise in output, income, employment, prices, and profits. The stimulation of investment
brings about the revival or recovery of the economy. Revival slowly emerges into prosperity and
the business cycle is repeated. In conclusion, during the expansionary or prosperity phase,
there is inflation and during the contraction or depression phase, there is a deflation.

b) UNEMPLOYMENT

DEFINITION OF UNEMPLOYMENT
Unemployment as defined as labor force participants being available and willing to work but
unable to find the jobs.

TYPES OF UNEMPLOYMENT
1. Frictional unemployment
Frictional unemployment is caused by temporary transitions in workers lives, such as when a
worker moves to a new city and has to find a new job. Frictional unemployment also includes
people just entering the labor force, such as freshly graduated college students. It is the most
common cause of unemployment, and it is always in effect in an economy.
2. Cyclical unemployment
Involuntary unemployment due to lack of demand for goods and services. This is also known as
Keynesian “demand deficient” unemployment. It is caused by economic conditions that go up
and down due to downswing in a business cycle or a recession.
3. Structural unemployment
Structural unemployment exists when there is a structural change in the economy of a country.
This happen because the composition of the labor force does not respond quickly to meet
changing demands, technological changes, or competition from imported good and so on.
4. Technological unemployment
It is caused by changes in the techniques of production. Technological changes are taking place
constantly and there is a need for the labor force to keep them updated and be responsive to
this change.

5. Casual and seasonal unemployment

Casual and seasonal unemployment is a kind of regular seasonal changes in employment or
labor demand. It arises due to a seasonal variation in the activities of particular industries. This
may be caused by climatic changes or changes in fashion or by the inherent nature of the
industries themselves.

6. Disguised / hidden unemployment

This is a type of unemployment to be found in the backward and the underdeveloped countries
of Asia and Africa. It refers to the mass unemployment which prevails in the agricultural sector
of an underdeveloped and overpopulated country.

7. Residual unemployment

Residual unemployment is a type of unemployment caused by personal factors such as old age,
physical or mental disability, poor work attitudes, and inadequate training

8. Real wage unemployment

Real wage unemployment is the result of real wages being above their market clearing level
leading to an excess supply of labor. Some economists believe that the minimum wage risks
creating unemployment in industries where international competition from low-labor cost
reducers in severe.

C) EXPECTATION

EXPECTATION ON THE CONDITION OF THE GLOBAL ECONOMY BEFORE EXISTENCE VACCINES AFTER
PANDEMIC COVID-19

CONDITION OF GLOBAL ECONOMY AFTER
PANDEMIC COVID-19

Unemployment rate Investment

40 2020 2021
35
30
25
20
15
10

5
0

2019

EXPECTATIONS

 Our expectation about unemployment rate after the covid19 outbreak before the
existence of vaccines in Malaysia is that the unemployment rate is increasing. This is
because the government has implemented a movement control order (MCO) which
causes a firm to reduce the number of employees due to the economic recession.
Firm cannot afford to pay employees’ wages because the demand for goods from
consumers is reduced. This happens because the firm does not want to incur a lot of
debt that would lead to bankruptcy. Moreover, the high rate of unemployment result
can reduction in investment. Due to unemployment rate increasing it causes the
economic growth ruins that can lead to further depression. Due to workers being
fired, the source of income is declining that can lead household just only buy
necessities good rather than buying luxury goods because run out savings this

causes the government run out of current money because consumers put the limit
when purchasing goods that include taxes.

EXPECTATION ON THE CONDITION OF THE GLOBAL ECONOMY AFTER EXISTENCE VACCINES
AFTER PANDEMIC COVID-19

 Our expectation after existence of vaccines in Malaysia, unemployment
Rates decrease because with the availability of vaccines makes the epidemic of
covid19 is gradually decreasing. With the vaccines the people are free to decide
what they want like present live without any control of movement. So they can work
as usual so they has source of income that able to support his life as well as being
able to buy necessities good and luxuries good. From the purchases of good, by the
consumers, can increase government finance and increase economic growth.

 Hoping that the government will take the action to address this problem such as
make a partnership with Jobs Malaysia where the Jobs Malaysia website can serve
an online job and search for all Malaysians especially for the fresh graduates to
reduce the unemployment rates in Malaysia.