lesson 13 - business cycles

Question 1

business cycle model

Answer 1

a model showing increases/decreases in real GDP over time

Question 2

aggregate demand

Answer 2

the total demand for a nation’s output

Question 3

aggregate supply

Answer 3

total supply of goods/services produced by businesses

Question 4

expansion

Answer 4

phase of cycle which output is increasing

Question 5

recession

Answer 5

the phase of the cycle which output is decreasing

Question 6

depression

Answer 6

deep/prolonged recession

Question 7

peak

Answer 7

turning point in the cycle between expansion and contraction

Question 8

trough

Answer 8

turning point in the business cycle between recession and expansion

Question 9

recovery

Answer 9

gdp begins to increase following a contraction and a tough

Question 10

potential output

Answer 10

the output that can be produced at maximum employment (no cylical unemployment)

Question 11

growth trend

Answer 11

straight line in the business cycle model –> usually upward sloping

Question 12

positive output gap

Answer 12

actual output vs potential output –> producing more than ppc

Question 13

negative output

Answer 13

producing less than ppc