Economics: Unit 1-Chapter 8: Business Cycle

Expansion: Real output in the economy is increasing and the unemployment is declining.

Peak: Real output is at its highest point

Contraction/Recession Phase: Real output is decreasing and the unemployment is rising,

Trough: The lowest point of real GDP

-A cycle is from trough to trough.
-Average cycle is 6 months.
-Recessions last about 14 months. The bulk of a cycle is the growth stage.
-Peak: Trough are meaningless because we never know we are in one until its over.
-If a recession loses more than 10 percent of real GDP that its a depression.
-Trough means the end of a recession.