Business Cycles: An Introduction

These flashcards cover key concepts related to business cycles, including definitions of economic indicators and models used in intermediate macroeconomics.

Business Cycle

Fluctuations in aggregate economic activity in which many economic activities expand and contract together in a recurring fashion.

Procyclical

A variable that moves up during expansions and down during contractions.

Countercyclical

A variable that moves down during expansions and up during contractions.

Acyclical

A variable where ups and downs do not coincide well with those of the business cycle.

Leading Indicator

A variable that reaches its peak/trough before the turning points of a business cycle.

Lagging Indicator

A variable that reaches its peak/trough after the turning points of a business cycle.

Coincident Indicator

A variable that reaches its peak/trough at the same time as the business cycle.

NBER

National Bureau of Economic Research, the entity that dates business cycles in the U.S.

Economic Activity

The output of the economy reflected by changes in GDP over time.

Real GDP Growth Rate

The rate at which a country's real GDP increases or decreases over time.

Inflation Rate

The percentage increase in the price level of goods and services in an economy over a period.

Investment Growth

The rate at which investment in an economy increases over time.

Aggregate Demand (AD)

The total demand for goods and services within an economy at a given overall price level and in a given time period.

Aggregate Supply (AS)

The total supply of goods and services that firms in an economy plan on selling during a specific time period.

Short Run vs. Long Run

In the short run, some factors of production are fixed; in the long run, all factors are adjustable.

Sticky Prices

Prices that do not change easily in response to changes in demand or supply.

Flexible Prices

Prices that can easily adjust to changes in economic conditions.

Economic Contraction

A decline in national output as measured by GDP.

Economic Expansion

An increase in national output as measured by GDP.

Aggregate Results

Summary measures of performance across segments of economic data.