Summary - Chapter 8
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1. What is Gross Domestic Product (GDP)?
GDP is the total dollar value of all final goods and services produced in the country in one year. GDP is the principle measure of the output of the United States.
5. What are the phases of the business cycle?
The business cycle has four phase. The peak is the highest point, where Real GDP reaches its maximum value during the cycle. After a peak. recession or contraction occurs, as Real GDP decreases. When Real GDP stops decreasing, the trough is reached. The trough is the lowest Real GDP value during the cycle. After the cycle recovers to a Real GDP value higher than the previous peak, we can say the economy is in prosperity. Prosperity lasts until the next peak is reached.