ECON 201 Lecture Notes - Lecture 5: Business Cycle, Open Economy, Social Cost
Document Summary
Econ 201 lecture 5 business cycle & inflation. In macroeconomics, while there is usually a long run growth trend in gdp, there are short run fluctuations. These can be illustrated as wobbles in the business cycle: biggest wobble is great depression, basically means growth isn"t consistent. Business cycle: x axis is time (usually years), y axis is real gdp. Terminology: business cycle: peak to peak, or trough to trough, peak: imagine a downward opening parabola. It"s the highest point (or peak: trough: imagine an upward opening parabola. It"s the lowest point: recession = depression = contraction (they"re all the same thing, just different names) One peak to the following trough: expansion. One trough to the following peak: recovery. You don"t really need to know this term, but its meaning is: Following a contraction, a recovery is trough to a point level with the previous peak. We use the business cycle to measure growth.
