ECON 1100 Chapter Notes - Chapter 7: Potential Output
17 Dec 2011
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Chapter 7 macro: short-term economic fluctuations, an introduction. Recession (or contraction): a period in which the economy is growing at a rate significantly below normal. Period during which real gdp falls for at least 2 consecutive quarters. Beginning of a recession is called the peak. The end of the recession is called a trough. Expansion: a period in which the economy is growing at a rate significantly above normal. Boom: a particularly strong & protracted phase of expansion. Expansions & recessions usually aren"t limited to a few industries or regions but are felt throughout the economy. Unemployment is a key indicator of short-term economic fluctuations. The part of unemployment relate to recessions is called cyclical unemployment. Inflation follows a typical pattern in recessions & expansions. Recessions tend to be followed soon after by decline in rate of inflation. Industries that produce durable goods (such as cars, houses & capital equipment) are more affected than others by recessions & booms.
