ECON 20 Lecture Notes - Lecture 14: Durable Good, Business Cycle, The Trough
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3 Dec 2020
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Describe the business cycle and its primary phases. Business cycle: alternating increases and decreases in economic activity over time. Phases of the business cycle: peak: business activity has reached a temporary maximum. Here the economy is near or at full employment and the level of real output is at or very close to the economy"s capacity. The price level is likely to rise during this phase: recession: a period of decline in total output, income, and employment. This downturn, which lasts six months or more, is marked by the widespread contraction of business activity in many sectors of the economy. Along with decline in real gdp, significant increases in umemployment occur: trough: output and employment bottom out at their lowest levels. The trough phase may be either short-lived or quite long. A recession is usually followed by a recovery and expansion: expansion: a period in which real gdp, income, and employment rise.
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