The Macroeconomy in the Short Run I (Business Cycles)

Question 1

Division of an “Business Cycle”

Answer 1

1. Recovery/Expansion (visible trough pro-longed positive
   output growth)
2. Peak
3. Recession/Contraction (visible trough pro-longed
   negative output growth)
4. Trough

Question 2

Peak and Trough in Burns-Mitchell diagrams

Answer 2

Peak:
Any quarter that is followed by two quarters with negative growth rates of real GDP

Trough:
First quarter following a peak that is succeeded by two quarters with positive growth rates of real GDP