Unit 14: The business cycle

a model showing the increases and drecreases in a nation’s real GDP over time; this model typically demonstrates an increase in real GDP over the long run, combined with short-run fluctuations in output

business cycle model

the phase of business cycle during which output is increasing

expansion

recession

the phase of business cycle during which output is falling

a deep and prolonged recession

depression (khủng hoảng kinh tế > recession)

the turning point in the business cycle between an expansion and a contraction (n: sự co lại/sự thu hẹp); during a peak in the business cycle, output has stopped increasing and begins to decrease

peak

the turning point in the business cycle between a recession and an expansion; during a trough in the business cycle, output that had been falling during the recession stage of the business cycle bottoms out (v: chạm đáy) and begins to increase again

trough (n: đáy)

when GDP begins to increase following a contraction (n: sự thu hẹp) and a trough in the business cycle; an economy is considered in recovery until real GDP return its long-run potential level

recovery

the level of output an economy can achieve when it is producing at full employment; when an economy is producing at its potential output, it experiences only its natural rate of unemployment, no more and less

potential output

the straight line in the business cycle model, which is usually upward-sloping (adj: độ dốc hướng lên) and shows the long-run pattern of change in real GDP over time

growth trend

the difference between actual output and potential output when an economy is producing more than full employment output , when there is a positive output gap, the rate of unemployment is less than the natural rate of unemployment and an economy is operating outside of its PPC (The production possibilities curve)

positive output gap (khoảng cách sản lượng dương)

the difference between actual output and potential output when an economy is producing less than full employment output, when there is a negative output gap, the rate of unemployment is greater than the natural rate of unemployment and an economy is operating inside of its PPC (The production possibilities curve)

negative output gap (khoảng cách sản lượng âm)