Business Cycle

y axis of business cycle graph

real GDP

x axis of business cycle graph

periods of time

business cycle

ups and downs in an economy

expansionary

part of cycle that is increasing

peak

highest point of real GDP of business cycle

contractionary

part of cycle that is decreasing

trough

lowest point of real GDP

recovery

early part of phase from trough

recession

later stage of contractionary that lasts at least 6 months or 2 quarters of the cycle

depression

economic situation where output falls to especially low levels and unemployment climbs to very high levels

three main economic goals

full employment, price stability, economic growth

full employment

unemployment rate of less than 5%

price stability

low and stable rate of inflation according to the consumer price index

economic growth

real GDP growing at an increasing rate