The length of the expansion. It has lasted a whole decade. Describe the pattern of a standard post WW2 business cycle. Increased growth, rising inflation. The Fed raises interest rates, growth falls, economy goes into recession.
Prices stabilize and the economy expands again.
Inflation has remained low. Describe two ways that the current US business cycle resembles the situation in Japan in the 1980s. Rising productivity through the boom. Interest rate reductions are not likely to help much at this stage The Fed should have increased interest rates more aggressively during the boom to curb the rise in the stock market. Do questions 5 and 6 on page 34 of Blanchard.