Output Gaps and Business Cycle Flashcards
1
Q
what is a boom
A
a prolonged period of growth with high levels of GDP growth
2
Q
what is a recession
A
2 successive quarters where GDP growth in negative
3
Q
what is a slump
A
a prolonged period of negative GDP growth
4
Q
what is a recovery
A
2 successive quarters following a recession with positive GDP growth
5
Q
what are output gaps
A
the difference between an economy’s current output and its potential
6
Q
where do negative output gaps appear
A
when actual output is below potential output
7
Q
where do positive output gaps appear
A
when actual output is above long run potential output
