Unit 1 - Business Cycles (1-21-16)

BUSINESS CYCLES

Peak: highest point of real GDP

• lowest unemployment
• greatest spending

Expansion: where real GDP is increasing

• causes spending to increase
• unemployment decreases

Contraction/Recession: where real GDP declines for 6 months

• increased unemployment
• reduction in spending

Trough: lowest point of real GDP

• highest unemployment
• least spending