Discovering Business Cycles – Flashcards
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Business Cycle
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the movement of the economy from good times to bad times and back again in four stages: prosperity, recession, depression, and recovery. The rise and fall of economic activity over time.
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Prosperity
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The high point of a business cycle, also called the peak, when employment is high, the demand for goods and services is high, and business are turning out goods and services as fast as they can
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Recession
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A stage in the business cycle in which the economy is in a period of decline--spending falls so fewer goods and services are demanded and unemployment rises.
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Depression
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The lowest point in a business cycle. It is also considered a deep recession; characterized by high unemployment and low productivity.
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Recovery
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A rise in business activity after a recession or depression. Production starts to increase, unemployment decreases, and GDP grows.
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General Economic Activity Indicators
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Gross Domestic Product, Unemployment, Inflation, and National Debt
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Gross Domestic Product (GDP)
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The total dollar value of all the goods and services produced in a country in a given year.
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Productivity
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A measure of how much a country produces
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Unemployment Rate
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Percentage that reflects the number of people who are able to work but do not have a job during a given period of time
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Inflation Rate
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Percentage that reflects a general increase in the cost of goods and services
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National Debt
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The total amount of money a government owes
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Budget Deficit
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When the government spends more on programs than it collects in taxes, or expenses exceed income.
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Budget Surplus
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When the government collects more in taxes than it spends on programs, or income exceeds expenses
