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The Business Cycle Flashcards

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Business cycle
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a cycle or series of cycles of economic expansion and contraction
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Expansion
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An economic expansion is an increase in the level of economic activity, and of the goods and services available. It is a period of economic growth as measured by a rise in real GDP
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Economic growth
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Economic growth is an increase in the capacity of an economy to produce goods and services, compared from one period of time to another. Economic growth can be measured in nominal terms, which include inflation, or in real terms, which are adjusted for inflation
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Peak
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A peak is the highest point between the end of an economic expansion and the start of a contraction in a business cycle. The peak of the cycle refers to the last month before several key economic indicators, such as employment and new housing starts, begin to fall.
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Contraction
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More specifically, contraction occurs after the business cycle peaks, but before it becomes a trough. According to most economists, a contraction is said to occur when a country’s real GDP has declined for two or more consecutive quarters.
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Trough
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In economics, a trough is a low turning point or a local minimum of a business cycle. The time evolution of many variables of economics exhibit a wave like behavior with local maxima (peaks) followed by local minima (troughs). A business cycle may be defined as the period between two consecutive peaks
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Recession
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a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.
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Depression
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In economics, a depression is a sustained, long-term downturn in economic activity in one or more economies. It is a more severe downturn than an economic recession, which is a slowdown in economic activity over the course of a normal business cycle
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Stagflation
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persistent high inflation combined with high unemployment and stagnant demand in a country’s economy
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Leading indicators
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measurable economic factor that changes before the economy starts to follow a particular pattern or trend