The Business Cycle Flashcards
1
Q
characteristics of a boom
A
*AE is above potential increased confidence higher consumption higher profits higher utilization low cyclical UE lower UE increases inflationary pressure higher GDP
2
Q
recession
A
2 consecutive quarter of negative growth
3
Q
characteristics of a trough
A
*AE is below potential high cyclical UE reduced profits lower sales and confidence lower inflation higher savings lower IR
4
Q
leading indicators
A
share prices building approvals levels of stock (inventory) business and consumer confidence consumer expectations new employment vacancies
5
Q
coincident indicators
A
GDP manufacturing output sales of consumer durables retail sales capacity utilization motor vehicle sales
6
Q
lagging indicators
A
interest rates consumer durables unemployment rate bankruptcies inflation rate (CPI)
7
Q
pro-cyclical
A
positive relationship with economic activity
8
Q
counter cyclical
A
negative relationship with economic activity
