ECO 1000 Lecture Notes - Lecture 15: Business Cycle, Potential Output, Aggregate Demand
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Document Summary
Recurring increases and decreases in the level of economic activity over periods of years; consists of peak, recession, trough, and expansion phases. The point in a business cycle at which business activity has reached a temporary maximum; the point at which an expansion ends and a recession begins. At the peak, the economy is near or at full employment and the level of real output is at or very close to the economy"s capacity. A period of declining real gdp, accompanied by lower real income and higher unemployment. The point in a business cycle at which business activity has reached a temporary minimum; the point at which a recession ends and an expansion (recovery) begins. At the trough, the economy experiences substantial unemployment and real gdp is less than potential output. (bottom part of the recession) The phase of the business cycle in which real gdp, income, and employment rise. (usually after recession)
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