Economic Growth and Business Cycles

These flashcards cover key concepts related to economic growth, business cycles, and their implications in macroeconomics.

Economic Growth

An increase in the production of goods and services over time, measured as the growth rate of GDP.

Capital Accumulation

Investment in physical and human capital that boosts productivity.

Technological Innovation

Advances that improve the efficiency and productivity of goods and services.

Mercantilism

An economic policy prevalent from the 16th to 18th centuries advocating government control of trade to accumulate wealth.

Capitalism

An economic system based on private ownership and free markets, emphasizing profit-driven businesses.

Central Planning

An economic system where the government controls resource allocation, production, and pricing.

Demographic Transition

The process by which a society transitions from high birth and death rates to low birth and death rates as it develops.

Business Cycles

Fluctuations in economic activity characterized by phases of expansion, peak, recession, and trough.

Recession

A period of declining economic activity lasting several months, marked by high unemployment, decreased consumer spending, and lower investment.

Aggregate Demand (AD)

Total spending in an economy, comprised of consumption, investment, government spending, and net exports.

National Income Identity

An equation expressing GDP as the sum of consumption, investment, government spending, and net exports (Y = C + I + G + X).

Keynesian Theory

An economic theory that suggests business cycles result from changes in aggregate demand, advocating for government intervention during recessions.

Fiscal Policy

Government use of spending and taxation to influence the economy and boost aggregate demand.

Monetary Policy

Actions taken by a central bank to influence money supply and credit conditions in an economy.