2.7: Business Cycle Flashcards
1
Q
The Business Cycle
A
the idea that the economy had a line that can determine the economy’s GDP over time
2
Q
Peak
A
unemployment low, spending & confidence high,
3
Q
What comes after a peak?
A
Recession, unemployment goes up and spending falls,
4
Q
Trough
A
the lowest the GDP
5
Q
What happens after a trough?
A
The economy recovery
6
Q
Does a trough mean recession?
A
No
7
Q
What is negative output gap
A
unemployment high, economy sluggish
8
Q
What is a positive output gap?
A
economy is expanding quickly, a lot of spending, a lot of inflation, econ overheating
9
Q
What is wrong with looking at the economy in the business cycle?
A
Doesn’t reflect the human cost of economic downturn
It suggests the economy fluctuates consistently, and predictable
