Business Cycle, Unemployment and inflation Flashcards
Business cycle
Peak (prosperity)
Recession
Depression (trough)
Recovery
Peak
High Real GDP growth rate
High Inflation rate
Low Unemployment
High Consuming power and investment incentive
Recession
Decreasing Real GDP growth rate
Decreasing Inflation rate
Increasing Unemployment
Decreasing Consuming power and investment incentive
Depression (trough)
Low Real GDP growth rate
Low Inflation rate
High Unemployment
Low Consuming power and investment incentive
Recovery
Increasing Real GDP growth rate
Increasing Inflation rate
Decreasing Unemployment
Increasing Consuming power and investment incentive
Labour force
People who are willing to work and aged 15 and above
Unemployed person
Anyone aged 15 and above, worked at least 7 days and is seeking work
Unemployment rate
Total number of unemployment/ labour force x 100%
Underemployment
Age 15 and above who works for less than 35 hours per week and seeking more work.
Cost of unemployment
To the unemployed
To the employed
To society
To economy

The cost to the unemployed
The standard of living are low
The cost to the employed
The government may need to increase the level of taxation to pay for the unemployment benefits.
The cost to society
Social problems such as drug abuse, suicide and mental illness and less on-the job-training so they accumulate less human capital 
To economy
Total output of the economy is far below its maximum level 
Consumer price index
Includes a basket of goods and services bought by household
Reflect the price changes of the goods and services purchased by the household and cannot reflect the price changes by firms and governments
Able to reflect the price changes of imported goods and services
