Key Concepts and Summary

Key Concepts and Summary

Over the long term, U.S. real GDP have increased dramatically. At the same time, GDP has not increased the same amount each year. The speeding up and slowing down of GDP growth represents the business cycle. When GDP declines significantly, a recession occurs. A longer and deeper decline is a depression. Recessions begin at the peak of the business cycle and end at the trough.

Glossary

business cycle

the relatively short-term movement of the economy in and out of recession

depression

an especially lengthy and deep decline in output

peak

during the business cycle, the highest point of output before a recession begins

recession

a significant decline in national output

trough

during the business cycle, the lowest point of output in a recession, before a recovery begins