Unit 1: Business Cycles

Price Ceiling: A legal max price meant to help buyers; it keeps the price from getting too high
  • Lower prices for some consumers
  • Shortage
  • Long lines for buyers
  • Illegal sales above the equilibrium price
Image result for price ceiling graph


    Price Floor: The legal minimum price that is meant to help the seller; it keeps product prices from falling
    • Higher product prices
    • Surplus
    • Higher taxes
    • Waste

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    Business Cycle: the fluctuation in economic activity that an economy experiences over a period of time
    • GDP (Gross Domestic Product) measures a country's standard of living
    • An average business cycle is 5 to 7 years
    • Expansion: a period where you experience high/real GDP and high employment
    • Peak: the highest point just before the unemployment rate rises 
    • Contraction/Recession: real GDP decreases and unemployment is high; lasts about 14 months; if a recession loses more than 10% of real GDP, then it's a depression.
    • Trough/Depression: lowest point; troughs are meaningless because we never know we're in one until it's over. 


    Image result for business cycle graph

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