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20 terms

The business cycle

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PLAY
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: