Recurring economic patterns shape the market from "summary" of Business Cycles and Equilibrium by Fischer Black
The economy is not a static entity. It is constantly in motion, affected by various factors that cause it to go through cycles of expansion and contraction. These cycles, known as business cycles, are a natural part of the market's functioning. They are driven by recurring economic patterns that shape the market in predictable ways. One of the key recurring economic patterns that shape the market is the boom and bust cycle. During a boom period, the economy experiences rapid growth, high levels of production, and increasing consumer spending. This leads to an increase in demand for goods and services, which in turn drives prices up. However, this period of prosperity is often unsustainable, as it can lead to inflation and asset bubbles. On the other hand, a bust period is characterized by a decline in economic activity, lower production levels, and decreased consumer spending. This re...
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