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Econ_OnlineLectureNotes_ch12_s2
Econ_OnlineLectureNotes_ch12_s2

... – To predict the next phase of a business cycle, forecasters must anticipate movements in real GDP before they occur. – Economists use leading indicators to help them make these predictions. • The stock market is a leading indicator. • Today, the stock market turns sharply downward before a recessio ...
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Slide 1
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Business cycle

The business cycle or economic cycle is the downward and upward movement of gross domestic product (GDP) around its long-term growth trend. These fluctuations typically involve shifts over time between periods of relatively rapid economic growth (expansions or booms), and periods of relative stagnation or decline (contractions or recessions).Used in the indefinite sense, a business cycle is a period of time containing a single boom and contraction in sequence.Business cycles are usually measured by considering the growth rate of real gross domestic product. Despite being termed cycles, these fluctuations in economic activity can prove unpredictable.A boom-and-bust cycle is one in which the expansions are rapid and the contractions are steep and severe.
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