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The short-run variation of economic growth is termed the business cycle, and almost all economies experience periodic recessions. Explaining and preventing these fluctuations is one of the main focuses of macroeconomics. A statistical relationship called Okun's law relates the growth rate of an economy to the level of unemployment...
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A statistical relationship called Okun's law relates the growth rate of an economy to the level of unemployment. On a Keynesian view, growth varies because of changes in aggregate demand, causing firms to produce more or less goods and for sale and hence altering the size of the economy. The contrasting real business cycle model suggests that in the short run growth depends on a series of shocks to the productivity of the economy, e...
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