UNIT 1 1/21/16

BUSINESS CYCLES

• PEAK

                  -HIGHEST POINT OF REAL GDP
                  -WHERE THE GREATEST AMOUNT OF SPENDING AND LOWEST AMOUNT OF UNEMPLOYMENT
                  -IN THIS PHASE INFLATION BECOMES A PROBLEM

• EXPANSION

                 -ALSO KNOWN AS  THE RECOVERY PHASE
                 - REAL GDP IS INCREASE DUE TO AN INCREASE SPENDING AND A DECREASE OF UNEMPLOYMENT

• CONTRACTION

                 -WHERE GDP DECREASE FOR 6 MONTHS DUE TO A REDUCTION IN SPENDING AND AN INCREASE OF UNEMPLOYMENT

• TROUGH

                - LOWEST POINT OF REAL GDP
WHERE YOU HAVE THE LEAST AMOUNT OF SPENDING AND THE HIGHEST UNEMPLOYMENT