In this chapter, you will learn to solve these economic puzzles: Can an economy produce more output than its potential? Is a worker who has given up searching for work counted as unemployed? What is the difference between a recession and a depression?. | Chapter 16 Business Cycles and Unemployment Key Concepts Summary Practice Quiz Internet Exercises ©2000 South-Western College Publishing * In this chapter, you will learn to solve these economic puzzles: What is the difference between a recession and a depression? Is a worker who has given up searching for work counted as unemployed? Can an economy produce more output than its potential? * What is a Business Cycle? Alternating periods of economic growth and contraction, which can be measured by changes in real GDP * What are the four phases of a Business Cycle? Peak Recession Trough Recovery * What is a Peak? The phase of the business cycle during which real GDP reaches its maximum after rising during a recovery * What is a Recession? A downturn in the business cycle during which real GDP declines * What is a Trough? The phase of the business cycle in which real GDP reaches its minimum after falling during a recession * What is a Recovery? An upturn in the business cycle during which real GDP rises * Hypothetical Business Cycle Peak Peak Trough Recession Recovery Growth trend line Real GDP per year * How long before a downturn is a Recession? The Department of Commerce usually considers a recession to be at least two consecutive quarters in which there is a decline in GDP * When is a downturn considered a Depression? The term depression is primarily an historical reference to the extreme deep and long recession of the early 1930’s * What is Economic Growth? An expansion in national output measured by the annual percentage increase in a nation’s real GDP * Why is Economic Growth one of our nation’s economic goals? It increases our standard of living - it creates a bigger “economic pie” * What are the three types of Economic Indicators? Leading Coincident Lagging * What is a Leading Indicator? Variables that change before real GDP changes * Leading Indicators Changes in business and consumer credit New . | Chapter 16 Business Cycles and Unemployment Key Concepts Summary Practice Quiz Internet Exercises ©2000 South-Western College Publishing * In this chapter, you will learn to solve these economic puzzles: What is the difference between a recession and a depression? Is a worker who has given up searching for work counted as unemployed? Can an economy produce more output than its potential? * What is a Business Cycle? Alternating periods of economic growth and contraction, which can be measured by changes in real GDP * What are the four phases of a Business Cycle? Peak Recession Trough Recovery * What is a Peak? The phase of the business cycle during which real GDP reaches its maximum after rising during a recovery * What is a Recession? A downturn in the business cycle during which real GDP declines * What is a Trough? The phase of the business cycle in which real GDP reaches its minimum after falling during a recession * What is a Recovery? An upturn in the
