Chapter 16
Business Cycle
are defined as alternating increases and decreases in economic activity.
Peaks are followed by
downturns or recessions
A Peak
in the business cycle usually means the economy is operating at its capacity.
Once a recession
is under way, businesses react by curtailing hiring and perhaps even laying off workers, thus adding to the recession's depth.
A double-dip recession
occurs when an economy's recovery falls short and enters another recession before it fully recovers.
The four phases of the business cycle
the peak, followed by a recession, leading to the trough or bottom of the cycle, finally followed by a recovery or an expansion to another peak.
NBER economists identify
the turning points at which the economy switches from peak to downturn or from trough to recovery.