ECO 2013 Lecture Notes - Lecture 7: Intermediate Good, Business Cycle
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Chapter 8- gdp: measuring total production and income (continued) Business cycle: alternating periods of economic expansion and economic recession. As you see in the graph above: the economy doesn"t grow at a steady rate, the peak and the trough are both inflection points, from the peak to the green point. Decrease in prices: from the trough to the peak. Increase in prices (inflation: we are usually a couple months behind in the data than where we currently are because it takes time to process. Think about shooting clay pigeons you don"t wait for the pigeon to be in front of your gun you have to take the shot before the pigeon gets in front of your gun. Expansion: the period of a business cycle during which total productions and total employment are increasing. Recession: the period of a business cycle during which total production and total employment are decreasing.