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This lecture covers the analysis of real heat pump cycles, focusing on the dominance of heat exchanger losses at low temperature lifts and expansion losses at high lifts. It discusses compression and expansion processes, emphasizing the benefits of intercooling and isenthalpic expansion. The instructor explains how to improve heat pump cycles by splitting compression and expansion processes, utilizing subcooling heat, and careful heat exchanger design. Implementing improvements through a two-stage compression heat pump cycle is detailed, highlighting the benefits of lower exhaust temperatures, reduced losses, and increased efficiency. The limitations of the two-stage cycle are also discussed, emphasizing its suitability for high temperature lifts and higher investment costs.