Module 40 Business Cycles

recession

A contraction severe enough to last several months or longer and have widespread effects on production, real income, employment, and sales across the economy.

contraction

A phase of the business cycle during which real GDP falls.

expansion

A phase of the business cycle during which real GDP rises.

bubble

A rapid and unsustainable increase in the price of certain assets, such as homes, gold, or stocks.

business cycle

Alternating periods of rising and falling real GDP.

depression

An extremely severe recession.

asset

Anything of value that is owned or controlled with the expectation that it will provide benefits in the future.

wealth

Made up of everything a person owns minus what that person owes to others.

trough

The lowest point of a business cycle.

aggregate demand

The total amount of domestic output purchased by all sector's of a country's economy, contingent on the price level.

aggregate supply

The total output a country's firms are willing and able to produce, contingent on the price level.

external shocks

Uncontrollable events, or decisions made in other countries.

changes in peak level

When the prices of goods or services across the economy go up or down.

peak

Where an expansion ends and a contraction begins.