Business

- Business cycle - a pattern set by growth or decline in real GNP. (phases: expansion, peak, contraction, and trough.)

- Expansion - a period of growth in real GNP.

- Peak - the highest point in a business cycle.

- Contraction - period of decline in real GNP.

- Trough- lowest level the economy reaches during a business cycle.

- Recession - during the contraction phase of the cycle real GNP declines for two consecutive quarters, or six months.

- Depression - if a recession is severe and persistent, maybe people out of work and many businesses closed.

- If population increases while production of goods and services remains the same, everyone's share of goods and services will be smaller.

- A combination of increasing supply and increasing demand can cause an economy to enter a long expansionary phase of the business cycle.

- If population grows because of a higher birthrate, demand for certain kinds of goods and services will increase soon.

- If population growth results from immigration, the effects will be different.

- Investment spending of businesses on capital resources, such as machines, tools and factories is another important factor.

- It works with the multiplier effect and acceleration principle.

- Investments may be either autonomous or induced.

- Autonomous Investment - results from influences outside the economy.

- Induced investment - encouraged by factors in the economy.

- Productivity - the efficiency with which goods can be produced.

- 2 factors that improved productivity are expanded education and capital investment.

- Consumer attitudes and expectations influence the general trend of the economy.

- A change in attitude about inflation also may cause a change in consumer spending patterns.

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