Chapter 11 Flashcards
what is the alternating periods of rising and falling lead GDP?
the business cycles
what is the phase of the business cycle during which real GDP rise
expansion
what is when an expansion and the economy will proceed to a contraction
peak
what type of GDP is a peak
it is the highest level
what is when a contraction is severe enough to last several months or longer and have widespread effects or production, real income, employment, and sales across the economy
a recession
what business has the say of whether a contraction has become a recession
national bureau of economic research
when a contraction ends and the economy will proceed to an expansionary phase
trough
how many business cycles have happened in the US since 1980?
5
what is the total output a country’s firms are willing and able to produce, contingent on the price level
aggregate supply
what is when the price level rises but changes in wages and other input prices lag behind; firms can increase profit by selling more
short-run
what is when an increase in the price level leads to increases in wages and other input prices; the incentive to produce more fades with the profit.
long run
what are the three types of external shocks?
- weather changes
- changes in the price of oil
- technological changes
what is the total amount of domestic output purchased by all sectors of a country’s economy, contingent on the price level
aggregate demand
what are the three causes of changes in price level?
- changes in household wealth
- changes in confidence
- government policy
what is a rapid and unsustainable increase in the price of certain assets, such as gold, homes, or stocks
bubble
