econ unit 5 vocab business cycle

expanison

a period of economic growth as measured by a rise in real GDP

contraction

an economic decline marked by falling real GDP

peak

height of an economic expansion

trough

lowest point of an economic contraction

recession

prolonged economic contraction. the GDP falls for two consecutive quarters (6 months)

4 things that affect the business cycle

business investment, interest rates and credit, consumer expectations, external shocks

capital deepening

process of increasing the amount of Human capital per worker

real gdp per capita

real gpd divided by the total population

labor productivity

amount of output produced per worker

saving

income that is not used for consumption

savings rate

percentage of money income that is saved

three things that affect capital deepening

population, government taxes, foreign imports