Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 12: Problem 1

Define: a. business cycle b. recession

Short Answer

Expert verified
The business cycle refers to the fluctuations in economic activity over a period of time and involves four phases: expansion, peak, contraction, and trough. A recession, on the other hand, refers to a period of economic decline marked by falling GDP in two successive quarters.

Step by step solution

01

Defining Business Cycle

The business cycle is a term used to refer to the fluctuations in economic activity that an economy experiences over a period of time. It comprises of four key phases: expansion, peak, contraction, and trough, which represents the state of the economy at different periods. The expansion phase is characterized by increased economic activity and growth. The peak represents the height of economic activity. Contraction is a slow-down or decrease in the rate of economic activity, and the trough is the lowest phase of a business cycle, after which a new cycle of expansion begins.
02

Defining Recession

A recession is a period of temporary economic decline which is generally identified by a fall in GDP in two successive quarters. Recessions are characterized by a decrease in demand and production, increased unemployment, and falling inflation. It is a stage in the business cycle where the economy 'contracts' before it begins to recover and expand.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

What are the five phases of a business cycle?

Define: a. absolute real economic growth b. per capita real economic growth c. human capital

Define: a. inflation b. demand-side inflation c. supply-side inflation d. velocity e. simple quantity theory of money f. hedge g. deflation

Explain how a change in aggregate demand and aggregate supply can cause deflation.

One explanation of the business cycle is that changes in business investment, residential construction, or government spending cause the business cycle. If this explanation is correct, how could you use this information to determine whether it is a good time or bad time to buy stocks in the stock market?
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free