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Published byReynard Snow Modified over 9 years ago
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The Business Cycle Definition: alternating increases and decreases in the level of economic activity, sometimes extending over several years
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Business Cycles in the U.S. Recessions last about 14 months historically
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Phases of the Cycle Peak: The top of the cycle where Real GDP is at a maximum Unemployment is low Inflation may be high Contraction: Real GDP is falling for two consecutive quarters Unemployment rate is increasing Inflation falls, might have deflation
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Phases of the Cycle Trough: The bottom of the Cycle where a contraction has stopped Unemployment is very high Zero to negative inflation (deflation) Expansion: A period where real GDP is growing and returning to Full Employment Unemployment is decreasing Inflation is increasing
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You should know… The secular trend The Quarter system A contraction or recession is a decline in real GDP that lasts at least 6 months (2 quarters) Expansions are associated with an assumption of increased inflation Recessions are associated with an assumption of increased unemployment
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2 more things STAGFLATION- Increasing inflation in the absence of economic growth MISERY INDEX- The unemployment rate and the inflation rate added together
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