Business Cycles, Recessions, and Depressions

          It is difficult for economists to predict the business cycle for many reasons.  One reason being that periods of expansion and recession are unavoidable and "driven in great part by a tug-of-war between expectations and reality" (2 Ip).  Business cycles are also heavily reliant on market cycles making them extremely susceptible to frequent change.  The business economy is largely about determining how people will react to certain things and that's hard enough to determine in just regular day to day life let alone when it comes to the future of businesses.  Businesses make these plans based on how much they expect their sales to grow, making these decisions just as dependent "on gut feelings as cold calculations" (2 Ip).  Business cycles are tough to predict.
          A bull market and a bear market contrast each other. A bull market is when the market appears to be in a long-term incline and a bear market is when the market appears to be in a long term decline.  A bull market tends to develop when the economy is strong, the unemployment rate is low, and inflation is under control.  A bear market is most likely to occur when unemployment is high and inflations is rising.  Bear markets are also "more violent than bull markets and the unemployment rises more quickly than it falls" (2 Ip).

          Imbalances have occurred throughout history causing these economic patterns.  Things such as crop failures and band panics were known as natural disasters during the nineteenth century in America.  A spike in oil prices is what caused these changes in 1973 and 1990.  Many believe that "if we could just inoculate ourselves against past imbalances then we could eliminate recessions" (3 Ip), however, this is not true because these imbalances come in many different forms and it is impossible to protect ourselves against all of them.
          A recession and a depressions often go hand in hand.  A recession is defined as two consecutive quarters in which real  gross domestic product falls.  A depression is described as a severe and prolonged recession.  A recession is mainly considered a depression when real gross domestic product falls for more than two consecutive quarters and when the "economy's normal recuperative mechanism fails to engage" (4 Ip).  A recession more often than not, leads to a depression.

The Underground Economy

            The underground economy is a system in which those who can not find a full-time or regular job are paid under the table.  This way they do not report their income and therefore have no taxes to pay on it.  There are positives and negatives to this system.  A positive to this system is an increase in consumer spending, however, this is only a short term effect.  Because people  gain more money through the underground economy, more money goes back into the system, "boosting the economy" (Koba).  A negative to this system is that this system is often associated with dangerous illegal activities.  "Drug dealing" (Koba) is a main way of making money through the underground economy.  This economy is very well known and because it is growing, it is becoming more and more clear that there is a need for change in our regular every day economy.  This is one effect that is negative because it shows us what is is wrong with the economy but also very helpful when trying to determine how our economic system today needs to change.  

Net Neutrality

          Net neutrality is a current controversial topic of discussion.  The idea of net neutrality is that all internet traffic should be treated equally.  It is the "principle that Internet service providers should enable access to all content and applications regardless of the source, and without favoring or blocking particular products or websites" (www.dig.csail.mit.edu).  It is important to both corporations and consumers.  Corporations would benefit from this because they could charge clients for going on certain sites and partly control your internet access.  Net neutrality is important for the consumers because most believe that corporations such as Comcast and Verizon should not have control over internet traffic.  The FCC controls the neutrality of the internet with the Open Internet Order.  It was created in 2010 to "prevent broadband Internet service providers from blocking or interfering with traffic on the Web" (http://www.savetheinternet.com).  The order prevents wired ISPs from blocking and discriminating against content on the internet.