1. Contraction TroughExpansion Peak The business cycle is a period of macroeconomic expansion followed by a period of contraction. During the expansion phase, a period of economic growth as measured by a rise in real GDP occurs. Once a peak is reached, this is the height of the economic expansion, when the real GDP stops rising. Then a contraction occurs where there is a decline marked by falling real GDP. Which ends in an economic trough, which is the lowest point in an economic contraction, when the real GDP stops falling.

2. Gross Domestic Product National Income and Product Accounts -National income accounting system collects macro- economic statistics On production income, investment savings -Data compiles by government in National Income And Product Accounts [NIPA] Gross Domestic Product [GDP] -GDP is dollar value of all final goods and services produced within a country’s borders in a given year -Expenditure approach calculates GDP by totaling estimates on annual expenditures on exports and imports -Income approach calculates GDP by adding up all the Income earned in the economy Nominal Versus Real GDP -Nominal GDP is the GDP Measured in current price -Real GDP is measured in constant, or unchanging, prices Limitations To GDP -Limitations include non- market activities, underground economy, negative- externalities, and quality of life -Limitations suggest that GDP is somewhat flawed measure of output and income Other Income And Output Measures -Gross national Product [GDP]: Annual income earned by US owned firms and US residents -Net National Product [NNP]: the GNP Minus the cost of depreciation -National income [NI]: the NNP minus sales and excise taxes Influences On GDP -Aggregate supply is total amount of goods and services in the economy available at all possible price levels -Aggregate demand is amount of goods and services in the economy that will be purchased at al possible price levels

3. Business Cycles An economic expansion is a period of economic growth measured by a rise in real GDP. In the expansion phase, the economy enjoys plentiful jobs, a falling employment rate, and business prosperity The peak is the height of an economic expansion. This is the point when the real GDP stops rising. Contraction is a period of economic decline marked by the falling real GDP. Unemployme nt rises in this period. In the trough period the economy bottoms out. This is the lowest point in an economic contraction, when the real GDP stops falling. If real GDP falls for two consecutive quarters, the economy is said to be in a recession. A recession is a prolonged economic contraction. When a recession is especially long and severe, it can be called a depression. During a depression there is high unemployment and low factory output. Stagflation occurs when there is a decline in real GDP combined with a rise in the price level.

4. Economic Growth Cause: Worker output increases Cause: Higher saving and investment Cause: Technological progress Effect: Higher standard of living Effect: Capital deepening Effect: Real GDP per capita rises Cause: GDP keeps pace with growing population.

5. _______ _________ ______ The __________ is a period of macroeconomic ________ followed by a period of ____________. During the expansion phase, a period of economic ____________ as measured by a rise in real ________ occurs. Once a peak is reached, this is the height of the economic expansion, when the real GDP __________. Then a ___________ occurs where there is a __________ marked by falling real GDP. Which ends in an economic____________, which is the __________ in an economic contraction, when the real GDP ___________________. The Business Cycle!!!!

6. Gross _____________ Product -National income accounting system collects macro- economic statistics On production income, investment savings -Data compiles by government in National Income And Product Accounts [NIPA] -GDP is dollar value of all final goods and services produced within a country’s borders in a given year -Expenditure approach calculates GDP by totaling estimates on annual expenditures on exports and imports -Income approach calculates GDP by adding up all the Income earned in the economy -Nominal GDP is the GDP Measured in current price -Real GDP is measured in constant, or unchanging, prices -Limitations include non- market activities, underground economy, negative- externalities, and quality of life -Limitations suggest that GDP is somewhat flawed measure of output and income -Gross national Product [GDP]: Annual income earned by US owned firms and US residents -Net National Product [NNP]: the GNP Minus the cost of depreciation -National income [NI]: the NNP minus sales and excise taxes -Aggregate supply is total amount of goods and services in the economy available at all possible price levels -Aggregate demand is amount of goods and services in the economy that will be purchased at al possible price levels

7. Business Cycles An economic __________ is a period of economic ______ measured by a rise in real ________. In the expansion phase, the economy enjoys __________, a _____________ employment rate, and _____________ The ______ is the ______ of an economic _______. This is the point when the ____ _____________ ____________. ________ is a period of economic __________ marked by the ________ real GDP. ___________ __________. In the ________ period the ______ bottoms out. This is the ___________ in an economic contraction, when the real GDP ____ _______________ If real GDP falls for ______ ________ quarters, the economy is said to be in a ________. A recession is a _________ economic contraction. When a __________ is especially long and severe, it can be called a ________. During a depression there is _____ _______________ and _____________ output. Stagflation occurs when there is a decline in real GDP combined with a rise in the price level.

8. Economic Growth Cause: Effect: Cause: