Unit II: Business Cycles 

  

Business Cycles: Fluctuations in economic activity that an economy experiences over a period of time.

There are four sections: 

Expansion: a period of economic upturn when output and employment are rising.

Peak: the highest point of real GDP. It is near or at full employment.

Contraction/recession is where real GDP decreases for at least six months.

Trough: the lowest point of real GDP. It has the least amount of spending and the highest unemployment.

      IMPORTANT INFO:

1. One cycle is from trough to trough
2. An average cycle is about five to seven years
3. Recessions last about fourteen months
4. Peaks and troughs are useless because we wont know we're in one until it's over
5. A trough is the end of a recession
6. If a recession loses more than 10% of real GDP it is a depression