AP_Ch_8_The_Business_Cycle.ppt

AP_Ch_8_The_Business_Cycle.ppt - Chapter 8 The Business...

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Chapter 8 “The Business Cycle”
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Overview Our economy has experienced a pattern of uneven growth throughout our history. Some periods are marked by rapid growth while during others the economy declines.
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Phases of the Business Cycle 1. Peak – temporary period of full employment and near capacity output. 2. Trough – bottom of a recessionary period. 3. Recession – decline from peak to trough. 4. Recovery – expansion from trough to peak.
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Causes of fluctuation 1. Irregular innovation or random events causes changes in business cycle. 2. Aggregate spending is the key.
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Non-cyclical fluctuations Seasonal variations are not the business cycle. (more sales around Christmas, etc.) Secular Trends- long term movements of the economy. (cover periods of 50-100 years.)
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Durable and Nondurable goods Durable good and construction industries feel the most impact of the business cycle.
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