The business cycle

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business cycle

recurring fluctuations in economic activity consisting of recession and recovery and growth and decline

downturn

a decline in economic activity

recession

a downturn that lasts more than 6 months

depression

a downturn that lasts for a year or two

upturn

an increase in economic activity

boom

a long period of expansion

consumption

purchasing and using goods and services

GNP

total value of goods and services that a country produces in a year including investments abroad

GDP

the market value of all final goods and services produced within a country in a given period of time

Keynesianism

the economic theory that government monetary and fiscal policy should stimulate business activity and increase employment in a recession

monetarism

the theory and policy that considers the best way to manage an economy and keep inflation low is by controlling the amount of money and credit that is available

exogenous theory

it looks for causes of the business cycle outside economic activity, e.g. the business cycle is caused by natural disasters, major technological inventions, elections, political shocks, etc.

endogenous theory

it looks for causes of the business cycle inside economic activity, e.g. people's spending or consumption decisions, which in turn are based on their expectations

peak

the highest point of the business cycle

trough

the lowest point of the business cycle

inflation

a rise in the general prices of goods and services in a particular country over a period of time, resulting in a fall in the value of money

deflation

a reduction in the amount of money in a country's economy so that prices fall or remain the same

stagflation

an economic situation where there is high inflation but no increase in the jobs that are available or in business activity

reflation

if a government or a national bank reflates the economy it increases or brings back economic demand by lowering taxes, increasing government spending, lowering interest rates, etc.

output

production; the amount of sth that a person, a machine, an organization or an industry produces:

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