|Posted on April 16, 2014 at 10:05 AM|
The business cycle shows the upturns and downturns of economic activity. It contains four parts:
1. Expansions (real GDP increases, unemployment falls)
2. Peaks (real GDP is at its max, resources are fully employed)
3. Contractions (real GDP declines, unemployment rises)
4. Troughs (real GDP is at its lowest point, unemployment is near its highest point)
The No Bull Review diagram below illustrates the four key parts along with an upward sloping line which demonstrates the long term trend of economic growth.
AP Macroeconomics Unit 2 Measuring Economic Performance