Lesson 8 Flashcards
What is the business cycle?
The business cycle is a fluctuation of economic growth and recession overtime.
How are the stages of the business cycle determined? What are some indicators?
Stages can be indicated by factors, such as unemployment, personal income industrial production, and retail states
What is the goal of economic policy?
The goal of economic policy is to keep the economy growing fast enough to create jobs for all that want/need one but slow enough to avoid inflation
What are some factors that contribute to the economy falling into a depression?
High unemployment and poverty can make an economy fall.
What facilitates the growth of an economy?
From a business POV, economy grows when
employment is high
companies are rising
inflation is reducing
demand is high
supply is in stock
What is inflation?
The prices of goods and services start rising, reducing the purchasing power
When you get less for your money
What is purchasing power and how does it relate to inflation?
Purchasing power is the amount and or value that your money can buy.
When inflation happens, the currency’s purchasing power decreases bc you get less stuff for the same amount of money.
What is monetary policy and how is it used to manage the business cycle?
Monetary policy is how the nation central bank uses tools to manage the economic cycle
It tries to stimulate the economy by using money supply, and interest rates, which can help heighten or lower inflation
What is fiscal policy and how is it used to manage the business cycle?
Fiscal policy is the process of the government revenue collection
It is used to manage the business cycle differently as elected officials all have their own views on the best way to use fiscal policy
