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CP Economics (Chapter 12, #2) GPS SSEMA1e
Name ______________________________
Date ___________________ Period______
Business Cycle
Warm Up #25- The Business Cycle
Figure 12.6 on page 359
1.
2.
3.
I. 5 Key Economic Indicators
A. Gross Domestic Product (GDP)
B. ____________________________________
C. The Unemployment Rate
D. Inflation
E. Consumer Price Index (CPI)
II. What is the Business Cycle?
A. KEY CONCEPTS
1. Changes in the ________________________________ often follow a broad
______________________________:
2. _____________________________ _______________________- series of periods of expanding and
contracting activity
i. Measured by increases or decreases in real GDP
3. Has ___________________________ phases:
ii. ___________________________
iii. Peak
iv. __________________________
v. Trough (length can vary)
B. Stage 1: Expansion
1. Expansion is a period of ______________________ __________________- increase in real GDP
i. real GDP ____________________ from a low point, or trough
2. During an expansion
i. ______________ easier to find; unemployment drops
ii. More _____________________________ needed to keep up with spending demand
iii. as resources become scarce, their ______________________ ___________________
C. Stage 2: Peak
1. _______________________ is point at which real GDP is __________________________
2. As prices rise and resources _____________________________, businesses become less profitable
i. ______________________________ ____________ ______________ production and real GDP
drops
D. Stage 3: Contraction
1. During ________________________________, producers cut back and _________________________
__________________
i. resources become less scarce, so prices tend to stabilize or fall
2. _______________________________- contraction lasting two or more quarters
3. Depression- long period of high unemployment and limited business activity
4. _______________________________- stagnation in business activity with inflation of prices
E. Stage 4: Trough
1. ____________________________ is point which real GDP and employment _____________
________________________
2. A business cycle is ___________________________ when it has gone through _________ four
_____________________
III. Predicting Business Cycles
A. KEY CONCEPTS
1. ____________________________
business cycle
_____________________- measures for predicting changes in
i. help business and government make ________________________ _____________________
2. ____________________________
_________________ real GDP
_____________________- measures that usually change
3. ____________________________ ______________________- measures that usually change at
______________ __________
as real GDP
4. ___________________________ ______________________- measures that usually change
________________ real GDP