The Brick Wall Economic Theory

What is the Business Cycle in economics? The business cycle can be described as successive periods of rising and falling economic activities. It can also be called the economic cycle or the trade cycle. A business cycle is measured by the upward and downward movement of the gross domestic product (GDP) and fluctuates constantly. The fluctuations are sometimes bigger than others and vary in length. Business Cycle with trendline The changes in the business cycle is repetitious but not periodic like the phases of the moon. What this means is that after a period where the business cycle moves down it will always be followed by a period that makes the cycle move up. But, the periods at which the cycle moves up or down always differ. A business cycle's length is measured by looking at the distance between a peak and a peak, and a trough and a trough. When the next peaks/troughs are higher than the ones before it, an upward trend can be seen. The same is applied for when th

The circular flow of the economy refers to how goods and services, as well as money, flows through the economy. Think of it this way. When you buy something, you exchange that product for money. The money you gave don't just stop right there, that money then gets used by the person you bought it from to buy something else. If this sounds a bit confusing to you don't worry because luckily my brick wall economic theory can be used to explain a lot of things related to the economy. (If you don't know what the brick wall theory is, you can read all about it in my first post by clicking here .) The modern circular flow of the economy usually has four major roleplayers: The households(consumers, ordinary people). The businesses(they sell you products and services). The government(they provide government services). The foreign markets(the place where import and exports go) Circular flow of the economy ( Monetary -money- flow illustrated in blue and real flow il

About three months ago my neighbour announced that he was going to make the wall between our houses taller. This doesn't sound like a problem at first, but then you start to realise what all the implications are. The first problem is that the wall is built with bricks. The wall then gets coated with a special plaster primer paint, and after that, it gets painted with a coat of paint that is resistant to the elements of mother nature. Now you may ask me why that is a problem? See, bricks are placed on top of each other and cemented in place. For those of you who don't know, cement is a runny substance that will succumb to gravity when it is placed on the side of a surface which will then make it run down the surface. In this case, the brick wall is the surface on which the cement is being placed. When the cement runs down the wall it creates this ugly grey patches on our once beautifully painted wall. I'm sure a lot of you at this point is saying, "I thought I cli