Question 12.3

1. Why do we talk about business cycles for the economy as a whole, rather than just talking about the ups and downs of particular industries?

We talk about business cycles for the economy as a whole because recessions and expansions are not confined to a few industries—they reflect downturns and upturns for the economy as a whole. In downturns, almost every sector of the economy reduces output and the number of people employed. Moreover, business cycles are an international phenomenon, sometimes moving in rough synchrony across countries.