AP Macroeconomics / Unit 2: Economic Indicators and the Business Cycle
2.7 Business Cycles
Notes
Real GDP rises and falls around its long-run trend: expansion → peak → contraction (recession) → trough.
- A recessionary gap: output below potential (high unemployment). Inflationary gap: output above potential.
Practice
A recession is a period of:
Contraction.
During a recession, which unemployment type rises?
Tied to the business cycle.
Output above potential GDP is a(n):
Overheating.
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