Business Cycle Flashcards
Trough (creux)
- GDP growth rate changes form negative to positive
- high unemployment rate
- increasing use of overtime and temporary workers
- spending on consumer durable good and housing may rise
- a moderate or decreasing inflation rate
Expansion
- GDP growth rate increase
- unemployment rate decrease as hiring accelerates
- investment increases in equipment and construction
- inflation rate may increase
- imports increase as domestic growth accelerates
Peak
- GdP growth rate decreases
- unemployment rate decrease but hiring slows
- consumer spending and business investments grow at slow rates
- inflation rate increases
Contraction/ récession
- gdp growth rate is negative for 2 consecutive quarters
- hours worked decreased: unemployment rate increase
- consumer spending, home construction, and business investments decrease
- inflation rate decrease with a lag
- imports decrease as domestic income growth slows
Credit cycles
Cyclical fluctuation in interest rates and availability of loans
Lenders are typically not willing to lend and offer lower interest rate during EXPaNSiOn et contrainte during CONTRaCTIONS
Credit cycles tend to be longer in duration than business cycle
May contribuante to stronger expansions deeper contrarions
Inventory sales ration
Contraction; sales slow, increase inventories, inventory/sales ratio increase above normal levels
Expansion; sale increase, decrease inventories, inventory/sales ration decrease below normal levels
Labor and capital utilization.
Beginning of contraction; sales fall et labor and capital are used less intensively (coupe les
Heures avant les employés)
Beginning of expansion: sale increase and labor and capital are used more intensivement
Économic indicator
Leading indicator: change de direction peak or through
Coincident indicators: change en meme temps peak and through
Lagging indicator: change direction apres expansion or contractions Deja en cours
