GDP Basics
GDP stands for this.
Gross Domestic Product
The phase where the economy is growing.
What is expansion?
Spending increases due to government stimulus checks.
What is fiscal policy?
Shoppers become worried about the future and start saving instead of spending. This usually causes the economy to slow into this stage.
What is recession)?
This type of GDP is adjusted for inflation.
What is real GDP?
The highest point in the business cycle.
What is the peak?
Hurricane, wars, and supply chain issues can cause this.
What is a negative supply shock?
Businesses start posting more job openings, increasing hours, and offering higher pay, this is a sign of this phase.
What is expansion?
Spending by households on goods and services is this component of GDP.
What is consumption?
Two quarters of negative GDP growth is called this.
What is recession?
A family buys a new couch, TV, and groceries.
What is an increase in consumption?
Stores notice their shelves are getting fuller because [people aren't buying as much. This is evidence the economy is moving towards this phase.
What is contraction?
Used goods are not counted in GDP for this reason.
What is consumption?
The lowest point in the business cycle.
What is trough?
A company builds a new factory and buys new machines.
What is an increase in investment?
The central bank raises interest rates to cool down the economy, often pushing the business cycle towards this point.
What is a peak?
This measure divides a country's GDP by its population to show average output per person.
What is GDP per capita?
The time after a recession when the economy begins to rise again.
What is recovery?
The government spends billions on new highways and bridges.
What is an increase in government spending?
Even though the business cycle goes up and down in the short-run, long-term rising output in the economy is driven mostly by gains in this factor.
What is productivity?