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Standard SSEMA1e- Define and label stages of the business cycle.
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Business Cycles in the United States
We interpret economic growth with business cycles. There are two phases to the business cycle. Which phase is this?
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Phases of the business cycles
Expansion- growing business activity and increasing GDP Contraction- Two consecutive quarters of declining GDP
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Expansion Peak- The highest point between the end of an economic expansion and the start of a contraction GDP is at it’s highest level
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Characteristics of the business cycle
Expansion GDP Unemployment Aggregate Demand ( High Wages) Aggregate Supply (production)
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Contraction Trough- Marks the end of a period of declining business activity and the transition to expansion. GDP is at its lowest level
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Characteristics of the business cyles
Contraction GDP Unemployment Aggregate Demand (consumers spend less and unemployed workers have little to no wage) Aggregate Supply (businesses produce less b/c of lower profits)
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Recession Two consecutive quarters of negative GDP
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Depression A depression occurs when a recession becomes severe.
This is a state of the economy with large numbers of unemployed, acute shortages, and excess capacity in manufacturing plants.
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