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11 Cards in this Set
- Front
- Back
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Business cycles refer to the...
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rise and fall of economic activity relative to its long-term growth trend.
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Business cycles are typicall comprised of...
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Expansionary Phase
Peak Contractionary Phase Trough Recovery Phase |
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Expansionary Phase
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Business cycle phase characterized by rising economic activity
growth economic activity is rising above its long-term growth trend |
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Peak
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Business cycle-high point of economic activity.
Marks the end of expansionary phase Firm profits are at their highest level Firms likely to face capacity constraints and input shortages |
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Contractionary Phase
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Business cycle phase-falling economic activity and growth
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Recovery Phase
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Business cycle-economic activity begins to increase and return to its long-term growth trend.
Firm profits stabalize Demand for goods and services begin to rise. |
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Occurs when the economy experiences negative real econoic growth(declines in national output)
2 consecutive quarters of falling national output. Excess capacity resources underutilized unemployement high |
Recession
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A very severe recession
Relatively long period of stagnation in business activity and high unemployment significant excess capacity |
Depression
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Business cycles result from
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shifts in aggregate demand and/or aggregate supply
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Illustrates the maxiumum quantity of all goods and services that households, firms, and the government are willing and able to purchase at any given price level.
Shows relationship between total output (real GDP)& price level |
Aggregate Demand Curve
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Illustrates the maxiumum quantity of all goods and services producers are willing and able to produce at each and every price level
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Aggregate Supply Curve
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