BUSINESS CYCLES

Business Cycles



Image result for business cycle graph
Business cycles are a fluctuation in economic activity that an economy experiences over a certain period of time. 
There are four main parts:
Expansion
- is a period of economic improvement when output and employment are rising.
Peak
- is the highest point of real GDP
- it is near or at full employment.
Contraction (recession)
- is where real GDP decreases for at least six months.
Trough
- is the lowest point of real GDP. It has the least amount of spending and the highest unemployment.

Hear are some key points to remember :) :
  • One cycle is from trough to trough
  • An average cycle is five to seven years
  • Recessions last about fourteen months
  • Peaks and troughs are meaningless because we never know we're in one until it's over
  • A trough means the end of a recession
  • If a recession loses more than 10% of real GDP, then it's a depression
If you still don't understand, here are some vids to help :) :
Business cycles and the production possibilities curve: https://www.youtube.com/watch?v=WNSYjRy2RKI


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