ECO2023 REPORT GROP 1

KOLEJ PROFESSIONAL MARA BANDAR MELAKA

ECO2023 MACROECONOMICS

PREPARED FOR:
MADAM HADRAH HANUM BINTI RAMLEE

Class: DBF3B

PREPARED BY: No. id

name BMF20-07-011
BMF20-07-013
MOHAMAD IDZHAM BIN MOHAMAD NIZAM BMF20-07-010
MUHAMMAD AMIRUL LUQMAN BIN ZAID BMF20-07-002
BMF20-07-083
MOHAMAD ALIFF ZAILAN BIN MOHD NASIR
WAFIY AIZUDDIN BIN IDRUS

MOHAMAD SYAHMI ADLI BIN ADNAN

DEFINITON OF BUSINESS CYCLE

A trade cycle is yet another term for a business cycle. It is an
important part of economics. The daily fluctuations in economic
activity in an economy are referred to as a business cycle. A
business cycle is also classified as a wave-like fluctuation in
aggregate economic activity, especially in terms of national
income, employment, and output. According to Keynes’s
definition, a business cycle is composed of periods of good
trade with rising prices and low unemployment percentages,
followed by periods of bad trade with falling prices and high
unemployment percentages.

CHARACTERISTICS

1. A business cycle is an economy-wide phenomenon which
prevails in all industries. If the depression or boom takes place
in an industrial sector such as construction, services,
agriculture and so on.

2. A business cycle is a wave like movement in economic
activity where an expansion is followed by a depression. So,
the economy moves from one position to another position like a
pendulum.

3. Business fluctuations occur periodically and tend to be
recurrent nature. They usually appear repeatedly after a period
of time. The periodicity and causes are not always the same.

4. Expansion and contraction in a business cycle are self-
reinforcing and cumulative in effect.

5. A business cycle is characterized by upwards and
downwards movements.

PHASES OF BUSINESS CYCLE

1) PEAK OR BOOM
2) RECESSION
3) THROUGH
4) RECOVERY

PHASES OF BUSINESS CYCLE

1) PEAK OR BOOM
• During this period, the economy is at full employment
where all available resources are employed. The economy
will experience a high level of output and trade, increasing
effective demand and higher employment levels and
income.
• Business optimism creates more investments increases
pressure on available resources that leads to an increase
in wages and prices of inputs. There could be a situation
where the number of jobs exceeds the number of workers,
this situation is known as overfull employment. As a result,
there will be an increase in prices, wages, interest, and
profit.
• The peak period also known as the prosperity period.

2) RECESSION
The recession is the stage that follows the peak phase. The
demand for goods and services starts declining rapidly and
steadily in this phase. Producers do not notice the decrease in
demand instantly and go on producing, which creates a
situation of excess supply in the market. Prices tend to fall. All
positive economic indicators such as income, output, wages,
etc., consequently start to fall.

3) THROUGH
In the depression stage, the economy’s growth rate becomes
negative. There is further decline until the prices of factors, as
well as the demand and supply of goods and services, contract
to reach their lowest point. The economy eventually reaches
the trough. It is the negative saturation point for an economy.
There is extensive depletion of national income and
expenditure.

4) RECOVERY

When the business cycles arrived at recovery phase, economic
activities will expand and rise. When demand and production
start increase, the investment will increase too as the
businessmen become more confidence and optimistic because
output, income, employment, prices and profits steadily rise.
Thanks to increase in investment, it stimulates the recovery of
economy by bank expand credit, business expansion takes
place and stock markets are activated. There is extensive
inflation of national income and expenditure.

TYPES OF UNEMPLOYMENT

1) FRICTIONAL UNEMPLOYMENT
• A NORMAL AND TRANSITIONAL UNEMPLOYMENT
RESULTING FROM BAD MATCHES IN THE LABOUR
MARKET.
• IT HAPPENS WHEN INDIVIDUALS ARE MOVING
BETWEEN JOBS, CAREERS AND LOCATIONS.
SOMETIMES, PEOPLE ARE WILLING TO BE
UNEMPLOYED WHILE WAITING TO GET ANOTHER
JOB AND NOT BECAUSE THEY ARE UNABLE TO
LOOK FOR A JOB

2) CYCLICAL UNEMPLOYMENT
• INVOLUNTARY UNEMPLOYMENT DUE TO A LACK OF
DEMAND FOR GOODS AND SERVICES.
• ALSO KNOWN AS KEYNESIAN “DEMAND EFFICIENT”
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

• EXISTS WHEN THERE IS STRUCTURAL CHANGES IN
THE ECONOMY OF A COUNTRY.

• THIS HAPPEN BECAUSE THE COMPOSITION OF THE
LABOUR FORCE DOES NOT RESPOND QUICKLY TO
MEET CHANGING DEMANDS, TECHNOLOGICAL
CHANGES OR COMPETITION FROM IMPORTED
GOODS AND SO ON.

• THE CLOSING OF THE PARTICULAR INDUSTRY MAY
CAUSE STRUCTURAL CHANGES IN THE NATION’S
INDUSTRY AS A WHOLE.

4) TECHNOLOGICAL UNEMPLOYMENT

• CAUSED BY CHANGES IN THE TECHNIQUES OF
PRODUCTION. TECHNOLOGICAL CHANGES ARE
TAKING PLACE CONSTANTLY AND THERE IS A NEED
FOR THE LABOUR FORCE TO KEEP THEMSELVES
UPDATED AND BE RESPONSIVE TO THIS CHANGES.

• FOR EXAMPLE, IN THE AGRICULTURAL SECTOR,
MANY UNSKILLED AND INADEQUATELY EDUCATED
WORKERS ARE LAID OFF BECAUSE OF MODERN
MECHANIZATION.

5) CASUAL & SEASONAL UNEMPLOYMENT

• A KIND OF REGULAR SEASONAL CHANGES IN
EMPLOYMENT/LABOUR DEMAND.

• THIS MAY BE CAUSED BY CLIMATIC CHANGES OR
CHANGES IN FASHION OR BY THE INHERENT
NATURE OF THE INDUSTRIES THEMSELVES.

• IT AFFECTS CERTAIN INDUSTRIES MORE THAN
OTHERS LIKE CATERING AND LEISURE,
CONSTRUCTION, RETAILING, TOURISM AND
AGRICULTURE.

6) DISGUISED/HIDDEN UNEMPLOYMENT

• TYPE OF UNEMPLOYMENT TO BE FOUND IN THE
BACKWARD AND THE UNDERDEVELOPED
COUNTRIES OF ASIA AND AFRICA.

• IT REFERS TO THE MASS UNEMPLOYMENT AND
UNDEREMPLOYMENT WHICH PREVAIL IN THE
AGRICULTURAL SECTOR OF AN UNDERDEVELOPED
AND OVERPOPULATED COUNTRY

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

1) UNEMPLOYMENT RATE WILL DECREASE

-Due to Pandemic Covid-19, unemployment rate increase when
there is a decline in the economy especially tourism sector and
aviation sector.
-After the Pandemic Covid-19 ended.
-Every sector of economy will be able to reopen like normal
day.
-Those who get fired during the pandemic will be able to find a
job again.
-As conclusion, unemployment rate will start to decrease.

2) ECONOMIC GROWTH
-Every economy sector will be able to continue at maximum
performance.
(hotel can open) (airline agency can open)
-No more limitation in terms of working or operating time.
(some shop can open 24 hours) (can have a maximum
customer in the shop)
(can go to work every day without follow turn)
- started to increase of total production & national income of
country.
-So, it can increase standard of living, purchasing power & per
capita income.

3) INCREASE IN GDP
- Higher production level leads to lower unemployment rate, so
demand will increase which lead to higher GDP
- Can hire more labour to meet the growing demand of the
economy.
- Can produce more supplies.

GRAPH
GDP FORECAST AFTER PANDEMIC COVID-19.

GRAPH
GDP IN GLOBAL