The Business Cycle

• Expansionary - the real output in the economy is increasing and the unemployment rate is declining
• ex : we can tell the stage of expansionary when houses are being built, gas prices are dropping
• Peak - where real GDP is at its highest point
• Contraction (Contractionary) - the real output in the economy is decreasing and the unemployment rate is rising/increasing
• also known as a recession
• Trough - lowest point of real GDP
• trough means that the graph curves downward real deep
• a depression (unless GDP seriously dropped)
• one business cycle goes from trough to trough
• Average cycle is 6 years
• Recessing last about 14 months
• Bulk of a cycle is the growth stage

• Peak - Trough, are meaningless because we never know we are in one until it's over
• If a recession loses more than 10% of real GDP, then it's a depression
• Trough means the end of a recession