February 1, 2018
Business Cycle
- Definition: It is fluctuation in economic activities that an economy experiences are a period of time.
- 4 Points to a Business Cycle:
- Expansion: A period of economic upturn when output and employment are rising.
- Peak: Highest point; Where business activity has reached a temporary maximum.
- Contraction / Recession: A recession and period of decline in total output, income, and employment.
- Trough: Lowest point; Economy turn from a recession to a depression.
- 1 cycle is from trough to trough
- Average cycle is 5 to 7 years
- Recessions last about 14 months
- Peaks and troughs meaningless because we never know we are in one until its over
- Trough means the end of recession
- If a recession loses more 10% of real GDP; then it is a depression.
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