Business Cycle Flashcards
(51 cards)
Business Cycle
The recurring pattern of expansion and contraction in the economy, characterized by increasing and decreasing economic activity and GDP growth
What does GDP stand for?
Gross Domestic Product
Gross Domestic Product
The total value of all goods and services produced within a country in a given period, serving as a measure of the country’s economic performance
Unemployment Rate
The percentage of the labor force that is unemployed and actively seeking employment, indicating the level of joblessness in an economy
Inflation
The general increase in prices of goods and services over time, leading to a decrease in the purchasing power of money
Expansionary (Recovery)
A phase of the business cycle characterized by increasing economic activity and GDP growth, indicating a recovery from a previous contractionary phase
Peak
The highest point of economic activity in a business Cycle, representing the end of an expansionary phase and the beginning of a contractionary phase
Contractionary (recession)
A phase of the business cycle characterized by decreasing economic activity and GDP contraction, leading to a decline in overall economic output
Trough
The lowest point of economic activity in a business cycle, marking the end of a contractionary phase and the beginning of an expansionary phase
Economic indicators
Statistics used to measure and analyze the performance of an economy. There are 3 we have considered in this class
Frictional unemployment
Unemployment that occurs when people are transitioning between jobs or entering the workforce for the first time
Structural unemployment
Unemployment that occurs due to a mismatch between the skills of workers and the available job opportunities, often caused by technological advancements or changes in the economy
Cyclical unemployment
Unemployment that occurs as a result of the ups and downs of the business
Demand-pull inflation
Inflation that occurs when demand exceeds the available supply of goods and services, leading to an increase in overall prices
Costs of Inflation
Negative consequences of inflation, such as reduced purchasing power, uncertainty in the economy, and potential distortions in resource allocation
Consumption spending
Spending by households on goods and services, reflecting the demand side of the economy and contributing to overall economic growth
Investment spending
Spending by businesses on capital goods and equipment, aimed at increasing production capacity and stimulating economic growth
Per Capita
Per person or per Capita basis, often used to measure economic indicators on an individual level to account for population differences
Poverty line
The income level below which income is insufficient to support a family or household
What are the main sources of the government’s income?
Income, sales, corporate
What does the government spend income on?
Healthcare, public services, police
During expansionary fiscal policy what happens to tax rates?
It goes down
During expansionary fiscal policy what happens to government spending?
It goes up
What is the Multiplier Effect?
The less people save the greater
