Chapter 13 Flashcards
Trough
GDP growth rate change from - to +
high unemployment rate
increasing use of overtime and temp workers
spending on consumer durabel goods and housing may rise
Moderate of decreasing inflation rate.
Expansion
GDP growth rate increases
unemployment rate decreases as hiring accelrates
investment increases for shit
inflation increases
imports increase as domestic growth accelrates
Peak
GDP growth rate decrease
Unemployment rate decrease, but hiring slows
Consumer spending and business investments grow at slower rates
Inflation rate increases.
Contraction/Recession
GDP growth rate is neg. two consecutive quarter.
house worked decreases; unemployment rates increase
consumer spending, home construction, business investment decrease.
inflation rate decrease with a lag
import decrease as domestic income growth slows.
leading Indicators and examples
change in direction before PEAK or Troughs.
Coincident indicators and examples
change in direction at same time as peak and trough
Lagging
Change in direction after expansion or contraction.
Inventory/sales ratio increaes
means its in early in contraction - sales slow and you end up having more inventory
Inventory/sales ratio decrease
early in expansion, sales increase and you end up having less inventory.
Classical Cycle
fluctuations measured in GDP terms
Growth Cycle
Fluctuations around a long-term trend growth level (examines gap between actual and trend GDP)
Growth Rate Cycle
Fluctuations in the growth rate of econ activity.
What happens to imports and exports when domestic currency appreicates
Imports go up and exports go down.
Economy is good so we can afford imports. We buy imports and sell exports.
What happens to imports and exports when domestic currency depreciates
Imports go down and exports go up. Imports get expensive for us and exports get cheaper for foreigners.
