Lesson 66 pg. 183 - 186

Question 1

What is a business cycle?

Answer 1

business cycle - recurrent fluctuations in the level of economic activity

Question 2

List the four main components of a business cycle

Answer 2

> expansion
peak
recession
trough

Question 3

Describe the expansion of a business cycle

Answer 3

> also called “boom”

>when industries increase amount of goods they produce, causing nation’s GDP to rise noticeably

Question 4

Describe the peak in a business cycle

Answer 4

> highest point of business cycle

>where activity is at its highest

Question 5

define gross domestic product (GDP)

Answer 5

gross domestic product (GDP) - value of all finished goods and services produced within a country during a year’s time
*before early 1990s, gross national product (GNP) was used

Question 6

Differentiate between gross domestic product and gross national product

Answer 6

> gross domestic product includes value of goods made by all nation’s citizens, foreign individuals, and international organizations located within the country
gross national product includes value of goods produced by citizen’s outside a nation’s borders but does not include foreigners within the country

Question 7

Describe the recession of a business cycle

Answer 7

> comes after a short or prolonged business boom has peaked out
period of economic decline
supply outweighs demand, causing producers to reduce their output and lay off employees

Question 8

Describe trough in a business cycle

Answer 8

> lowest point in a business cycle

Question 9

Define leading indicators

Answer 9

leading indicators - components of the economy that normally change before the rest of the economy