1. Business cycles
Chapter 12

2. Economic cycles
The economy undergoes periodic cycles of good times, then bad times, and then good times again.
Economists try to predict what the economy will do in the future

3. Business Cycle A period of expansion followed by on of contraction
Not minor day to day ups and downs, but major changes in GDP above or below normal levels

4. Phases of the Business cycle
Expansion
Peak
Contraction
trough

5. expansion A period of economic growth as measure by a rise in GDP
Plentiful jobs
Falling unemployment rate
Businesses prosper

6. Peak
The height of an economic expansion, when GDP stops rising

7. Contraction After reaching the peak Economic decline Falling GDP
Unemployment rises

8. Trough (trawf) Lowest point in economic contraction GDP stops falling
Begins a new period of expansion

9. Recession Gdp falls for two consecutive quarters (at least 6 months)
Prolonged economic contraction
Unemployment reaching 6-10%

10. depression Long and severe recession
High unemployment and low economic output

11. Stagflation
Decline of GDP combined with a rise in price level (inflation)

12. Your assignment How long was the recession
What factors caused the recession
What contributed to the recovery

13. Recessions
1945
1949
1953
1957
1960
1970
1980
1991
2001
2008