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Business Cycles and Their Characteristics definitions

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  • Business Cycle
    Natural pattern of alternating periods of economic growth and decline, reflected in fluctuations of production, income, and employment.
  • Expansion
    Phase marked by rising production, income, and employment, often driven by increased business activity and consumer spending.
  • Contraction
    Phase characterized by declining production, income, and employment, often resulting in layoffs and reduced economic activity.
  • Peak
    Highest point in economic activity before a downturn, signaling the end of an expansion and the start of a contraction.
  • Trough
    Lowest point in economic activity before recovery begins, marking the transition from contraction to expansion.
  • Irregular Innovation
    Unpredictable technological breakthroughs that trigger sudden economic booms, later absorbed as growth stabilizes.
  • Productivity Change
    Alteration in output efficiency, often due to technology, resource availability, or human capital improvements, impacting economic growth.
  • Monetary Policy
    Actions by the Federal Reserve to influence the economy, such as adjusting interest rates or money supply, causing economic shocks.
  • Political Event
    Unexpected occurrences like wars or terrorism that disrupt economic stability, leading to booms or recessions.
  • Financial Instability
    Market disruptions, such as asset bubbles bursting, that can trigger recessions and widespread economic downturns.
  • Unemployment
    Condition where individuals seeking jobs cannot find work, typically rising during contractions and falling during expansions.
  • Inflation
    General increase in price levels, usually rising during expansions and falling during recessions due to changes in spending.
  • Jobless Recovery
    Situation where economic output grows after a recession, but unemployment remains high or continues to rise.
  • Economic Shock
    Sudden, unexpected event that disrupts normal economic activity, causing rapid changes in growth or recession.