a) Trade cycle

a) understanding of the trade (business) cycle

b) characteristics of a boom

c) characteristics of a recession

trade cycle = changes in RGDP over time

• relationship between actual growth and long-term trend growth

economic boom

• economic growth

• low unemployment

• high inflation

• high tax revenue + low government expenditure

economic recession

• two consecutive quarters of economic decline

• high unemployment

• low inflation

• low tax revenue + high government expenditure