Chapter 22

Economic Growth, Business Cycles and Stabilization Policy


After studying this chapter, you should be able to understand:

  • Economic growth refers to an increase in the amount of goods and services which are produced in an economy over time.
  • The Harrod–Domar model is a long-run model, which is an extension of the Keynesian model of income and employment.
  • The views of Robert Solow, Trevor Swan, James Tobin and many others have been put together as the neoclassical growth theory, which was developed in the 1950s.
  • Business cycles relate to economic changes in the short run in production.
  • A business cycle generally moves between periods of expansions and contractions with the peaks and the troughs forming the extremes.
  • According to the ...

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