Chapter 13

Phases of the Business Cycle:

  • Depression = A dramatic & sustained downturn in economic activity

  • Recession = A period between a peak in the business cycle

  • Recovery = A period of economic growth improving business activities

  • Prosperity = Economic growth

Inflation = The rate of increase in prices over a given time

  • Demand-pull, Cost-push, and Wages price spiral (how it happens)

Characterized by:

  1. CPI (Consumer Price Index) = The general rise in prices

  2. Caused Inflation = too much money in the economy

  3. Inflation Effect = The value of the dollar goes down

Great Depression = Bad time, awful in the late 1930s

Great Recession = Global economic downturn that occurred in 2008

CPI (Consumer Price Index) = Consumer prices INDEX, percentage of common goods and services (Formula - Years current price / Base years price X 100)

“REMEMBER THE DAMN GMP FORMULA = C+I+G+F”

Credit = A person or institution to whom money is owed

Debtor = A person or institution to whom owes money

Unemployment/Employed Persons:

  • Employed Persons = Workes for pay 1-15 hours (over the age of 16)

  • Unemployment Person = Not working, but seeking employment in 4 weeks

  • Frictional Unemployment = Between jobs

  • Structural Unemployment =Fundamental change in the economy reduced demand for workers

  • Cyclical Unemployment = Swings in the business cycle

  • Seasonal Unemployment = Annual changes in the weather

  • Technological Unemployment = Technological developments