An Introduction and Guide to Real Business Cycle Theory

An Introduction and Guide to Real Business Cycle Theory Real  business cycle  theory (RBC theory) is a class of macroeconomic models and theories that were first explored by American economist John Muth in 1961. The theory has since been more closely associated with another American economist, Robert Lucas, Jr., who has been characterized as â€Å"the most influential macroeconomist in the last quarter of the twentieth century.†Ã‚  Ã‚   Intro to Economic Business Cycles Before understanding real business cycle theory, one must understand the basic concept of business cycles. A business cycle is the periodic up and down movements in the economy, which are measured by fluctuations in real GDP and other macroeconomic variables. There are sequential phases of a business cycle that demonstrate rapid growth (known as expansions or booms) followed by periods of stagnation or decline (known as contractions or declines). Expansion (or Recovery when following a trough): categorized by an increase in economic activityPeak: The upper turning point of the business cycle when expansion turns to contractionContraction: categorized by a decrease in economic activityTrough: The lower turning point of the business cycle when contraction leads to recovery and/or expansion Real business cycle theory makes strong assumptions about the drivers of these business cycle phases. Primary Assumption of Real Business Cycle Theory The primary concept behind real business cycle theory is that one must study business cycles with the fundamental assumption that they are driven entirely by technology shocks rather than by monetary shocks or changes in expectations. That is to say that RBC theory largely accounts for business cycle fluctuations with real (rather than nominal) shocks, which are defined as unexpected or unpredictable events that affect the economy. Technology shocks, in particular, are considered a result of some unanticipated technological development that impacts productivity. Shocks in government purchases are another kind of shock that can appear in a pure real business cycle (RBC Theory) model. Real Business Cycle Theory and Shocks In addition to attributing all business cycle phases to technological shocks, real business cycle theory considers business cycle fluctuations an efficient response to those exogenous changes or developments in the real economic environment. Therefore, business cycles are â€Å"real† according to RBC theory in that they do not represent the failure of markets to clear or show an equal supply to demand ratio, but instead, reflect the most efficient economic operation given the structure of that economy. As a result, RBC theory rejects Keynesian economics, or the view that in the short run economic output is primarily influenced by aggregate demand, and monetarism, the school of thought that emphasizes the role of government in controlling the amount of money in circulation. Despite their rejection of RBC theory, both of these schools of economic thought currently represent the foundation of mainstream macroeconomic policy.

Smoke Magic Trick - Smoking Fingers

Smoke Magic Trick - Smoking Fingers Would you like to try a simple smoke magic trick? It easy to make your fingers smoke when you rub them together and glow in the dark. All you need is a matchbox and a way to burn the striker portion. Theres also a video of the smoking fingers project, if youd like to see what to expect. Difficulty: Easy Time Required: about a minute Materials The key materials for this project are matches, a matchbox with striker, a metal surface, and a way to make the metal cold. Matchbox of safety matchesCold water faucet or chilled panScissorsLighter One easy way to get cold metal is to run cold water through a faucet. If the water out of your tap isnt particularly cold, another option is to refrigerate a metal pan or set it onto a dish of ice. Perform the Smoke Magic Trick Cut out the striker portion of a matchbox from a box of safety matches. Trim off any paper around the striker.Fold the striker in half, striker-sides facing each other.Set the folded striker on top of the running cold water faucet or a refrigerated metal pan.Use a lighter to set fire to the striker. Ignite both ends. Then run the lighter along the length of the folded striker. It wont burn to ash, which is fine.Discard the burned striker.You will see a brown residue that has been deposited along the top of the faucet or metal pan. Run your fingertip along the residue to pick it up.Slowly rub your finger and thumb together. If you do this in the dark, your fingers will have a greenish glow. Very, very cool. Tips for Success Wash your hands after doing this, and try to avoid breathing in the smoke. The trick probably involves white phosphorus, which can be absorbed through your skin and is toxic.If you dont have scissors, you can do this trick by tearing off the striker portion of the matchbox with your fingers. Its just easier to cut out the striker, if you can.You could use the matches in the matchbox, rather than a lighter, of course. How the Smoking Fingers Trick Works Are you interested in the science behind this smoke trick? Its commonly believed the smoke is vaporized white phosphorus. Heres how it works: Phosphorus is a chemical element that can take several forms, called allotropes. The type of phosphorus in the striker of match boxes is red phosphorus. When you burn the striker, the phosphorus is vaporized and condenses into a solid onto the cool metal surface. This is white phosphorus. The element has not changed identify, just the structural arrangement of the atoms. Rubbing your fingers together produces enough heat from friction to vaporize the phosphorus into what appears to be smoke. The smoke glows green in the dark. While you might assume this is phosphorescence (since youre using phosphorus, after all), its actually an example of chemiluminescence. Phosphorus reacts with oxygen from air to release energy in the form of light. The reason scientists know the red phosphorus from the striker vaporizes into white phosphorus is because of the green glow. Only white phosphorus glows in the dark! White phosphorus readily reacts with oxygen in air to form a flammable compound. Because of this, one of the earliest uses of the purified element was to make matches. Early friction matches have been around since Robert Boyle made them back in 1680, although they did not become popular until 1830. The early phosphorus-based matches were dangerous, containing enough phosphorus to poison a person. Modern matches are called safety matches because they dont use highly toxic chemicals. Smoke Trick Safety The smoking fingers trick used to be a popular school science demonstration. It is not performed much any more because of concerns about the risk from the phosphorus, but if you do the trick infrequently, the dose of phosphorus is small. While red phosphorus is the form of the element that is essential for human life, white phosphorus can cause chemical burns and have a negative effect on bones. You can lessen the exposure by wearing thin, disposable gloves and taking care not to breathe the vapor. Disclaimer: Please be advised that the content provided by our website is for EDUCATIONAL PURPOSES ONLY. Fireworks and the chemicals contained within them are dangerous and should always be handled with care and used with common sense. By using this website you acknowledge that ThoughtCo., its parent About, Inc. (a/k/a Dotdash), and IAC/InterActive Corp. shall have no liability for any damages, injuries, or other legal matters caused by your use of fireworks or the knowledge or application of the information on this website. The providers of this content specifically do not condone using fireworks for disruptive, unsafe, illegal, or destructive purposes. You are responsible for following all applicable laws before using or applying the information provided on this website.