Economics Study

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Expansion

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The act or process of expanding, in the business cycle

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Contraction

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Aperiod of economic decline or negative growth. That's when the economy is growing. Grossdomestic product, whichmeasures economic output, is increasing.

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Peak

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The highest value reached by some quantity in a time. The peak is the second phase. It is the month when the expansion transitions into the contraction phase.

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Through

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The lowest turning point of a business cycle

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What is GDP

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Gross domestic product (GDP) is the monetary value of all the finished goods and services produced withina country's borders in a specific time. Though GDP is usually calculated on anannual basis, it can be calculated on a quarterly basis as well. GDP is a broad measurement of anation’s overall economic activity.

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HumanDevelopment Index

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The Human Development Index (HDI) is a composite statistic of lifeexpectancy, education, and per capita income indicators, which are used to rankcountries into four tiers of humandevelopment.

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Outline threeproblems when comparing one country’s GDP to another

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GDP doesn't consider the level of debt a country has

GDP also doesn't consider the risk of public policy changing to makeforeign investment riskier

It also doesn't consider the level of corruption in a country

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ExpansionaryFiscal Policy

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An expansionary policy is amacroeconomic policy that seeks to expand the money supply toencourage economic growth or combat inflationary price increases. One form of expansionary policy is fiscal policy, which comes inthe form of tax cuts, transfer payments, rebates and increased government spending.

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Contractionary Fiscal Policy

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This is accomplished by decreasing aggregateexpenditures and aggregate demand through a decrease in government spending(both government purchases and transfer payments) or an increase in taxes. Contractionary fiscal policy leadsto a smaller government budget deficit or a larger budget surplus.

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Difference between discretionary and non-discretionary fiscal policy

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The net effect of a nondiscretionary fiscal policy is to create deficits during recessions and surpluses when the economy expands very quickly. Unlike nondiscretionary fiscal policies, discretionary fiscal policies require explicit government intervention. ... In a recession, they reduce taxes and increase spending.

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Expansionary monetary policy

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Definition of expansionary monetary policy. A policy by monetary authorities to expand money supply and boost economic activity, mainly by keeping interest rates low to encourage borrowing by companies, individuals and banks.

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DeflationaryMonetary Policy

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If inflation "overheats" and prices rise too rapidly, restrictive or 'tight' monetary and fiscal policy tools are employed. If prices begin to fall generally, as is the case withdeflation, 'loose' or expansionary monetary and fiscal policy tools are used

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Unemployment

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the state of being unemployed.

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Cyclical unemployment

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Cyclical unemployment is a factor of overall unemployment that relates to the cyclical trends in growth and production that occur within the business cycle. When business cycles are at their peak, cyclical unemployment will be low because total economic output is being maximized.

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Real wageunemployment

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Real Wage unemployment occurs when wages are above the equilibrium level causing the supply of labour to be greater than demand. Classical economists argue the solution is to cut wages to reduce unemployment.

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structuralunemployment

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unemployment resulting from industrialreorganization, typically due to technological change, rather than fluctuationsin supply or demand.

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Seasonal Unemployment Seasonal

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unemployment occurs when people are unemployed at certain times of the year, because they work in industries where they are not needed all year round. Examples of industries where demand, production and employment are seasonalinclude tourism and leisure, farming, construction and retailing.

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FrictionalUnemployment

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the unemployment which exists in any economy due to people being in the process of moving from one job to another.

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3 costsof high level of unemployment

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lower GDP

Lower standard of living

Lower economic growth

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Inflation

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I,inflation is a sustained increase in the general price level of goods and services in an economy over a period of time resulting in a loss of value of currency.

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Causes of inflation

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Causes of inflation. Inflation means there is a sustained increase in the price level. The main causes of inflation are either excess aggregate demand (economic growth too fast) or cost push factors (supply-side factors).

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Difference between government budget surplus and government budget deficit

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Surplus budget is a situation where income exceeds expenditure . ... Thus ,surplus budget is a situation when government spends less than what it has earned as income in form of taxes etc. On the contrary , a deficit budget is a situation when government's expenditure is more than it's revenue.