Podcast
Questions and Answers
What phase of the business cycle typically follows a trough?
What phase of the business cycle typically follows a trough?
- Expansion (correct)
- Peak
- Recession
- Contraction
If a country experiences a significant decline in real GDP for two consecutive quarters, which economic condition is it most likely facing?
If a country experiences a significant decline in real GDP for two consecutive quarters, which economic condition is it most likely facing?
- Inflationary gap
- Expansion
- Depression
- Recession (correct)
What is the key difference between a recession and a depression?
What is the key difference between a recession and a depression?
- A recession lasts for at least one year, while a depression lasts only a few months.
- A recession involves increased employment, while a depression involves decreased employment.
- A depression involves a mild economic downturn, while a recession involves rapid economic growth.
- A depression is an unusually long, harsh, and severe recession. (correct)
During which phase of the business cycle is unemployment most likely to be at its highest?
During which phase of the business cycle is unemployment most likely to be at its highest?
In the business cycle, what immediately precedes a contraction?
In the business cycle, what immediately precedes a contraction?
What does Real GDP measure?
What does Real GDP measure?
Which of the following represents a period of economic expansion?
Which of the following represents a period of economic expansion?
What is the effect of an inflationary gap?
What is the effect of an inflationary gap?
What happens to the economy during a contraction?
What happens to the economy during a contraction?
If government implements policies to stimulate demand and increase employment, what is the economy trying to move away from?
If government implements policies to stimulate demand and increase employment, what is the economy trying to move away from?
Flashcards
What is the Business Cycle?
What is the Business Cycle?
Represents the fluctuations in economic activity over a period of time.
What is a Peak?
What is a Peak?
The highest point of economic activity in the business cycle.
What is a Trough?
What is a Trough?
The lowest point of economic activity in the business cycle.
What is Expansion (Recovery)?
What is Expansion (Recovery)?
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What is Contraction (Recession)?
What is Contraction (Recession)?
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What is Full Employment?
What is Full Employment?
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What is a Recessionary Gap?
What is a Recessionary Gap?
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What is an Inflationary Gap?
What is an Inflationary Gap?
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What is a Recession?
What is a Recession?
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What is a Depression?
What is a Depression?
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Study Notes
- Business cycle includes peaks, troughs, full employment, expansion (recovery), and contraction (recession).
- Recessionary and inflationary gaps are also key components.
Business Cycle Graph (Real GDP)
- The business cycle graph includes "Real GDP" on the y axis.
- Begins with expansion, which leads to contraction(recession).
- The lowest point is the trough, and the next phase is recovery.
- "Business Peak" shows the turning point from expansion to recessionary gap.
- Average shown on y axis.
Defining Economic Downturns
- A recession occurs when the economy has been contracting for two consecutive quarters (6 months).
- A depression is an unusually long, harsh, and severe recession.
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