Business 5: Changes in Economic and Business Cycles Flashcards
What do business cycles refer to?
Rise and fall of economic activity relative to its LT growth trend
What do business cycles refer to?
Rise and fall of economic activity relative to its LT growth trend
Define GDP
total market value of all final g&s produced w/i the borders of a nation in a particular period
Define GDP
total market value of all final g&s produced w/i the borders of a nation in a particular period
Does GDP include the output of foreign-owned factories in the US?
Yes
Does GDP include the output of US owned factories operating abroad?
No (included in GNP)
Is nominal GDP adjusted for inflation?
NO (reflects current prices)
Is real GDP adjusted for inflation?
YES (reflects constant prices)
How would you calculate real GDP?
= (nominal GDP / GDP deflator) * 100
How would you calculate real GDP?
= (nominal GDP / GDP deflator) * 100
How would you calculate the change in real GDP?
= (CY real GDP / PY real GDP) - 1
How would you calculate the change in real GDP?
= (CY real GDP / PY real GDP) - 1
What is real GDP per capita?
real GDP divided by population
How is economic growth generally measured?
= increase in real GDP per capita over time
How is economic growth generally measured?
= increase in real GDP per capita over time
What is an expansionary phase characterized by?
- Rising GDP, profits, prices
- Falling unemployment
A peak is a _____ ____ of economic activity.
High point
A peak is a _____ ____ of economic activity.
High point
What is a contractionary phase characterized by?
- Falling GDP, profits
- Rising unemployment
An economy contracts until it reaches its what?
Trough
An economy contracts until it reaches its what?
Trough
What phase follows a trough in the business cycle?
Recovery phase
What phase follows a trough in the business cycle?
Recovery phase
How do economists define a recession?
2 consecutive quarters of falling national output