#AP Macroeconomics: The Business Cycle - Your Night-Before Guide 🚀

Hey! Let's make sure you're totally ready for the exam tomorrow. We're going to break down the business cycle, link it to everything we've learned, and get you feeling confident. Let's dive in!

#Unit 2: Measuring Economic Health

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• Gross Domestic Product (GDP): The total value of all goods and services produced within a country's borders. Think of it as the economy's overall output. 📈
• Unemployment: The percentage of the labor force that is actively seeking work but cannot find it. It's a crucial indicator of how well the economy is using its resources. 🧑‍💼
• Inflation: The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling. It's important to track to ensure a stable economy. 💰

#The Business Cycle: A Quick Overview

• The economy doesn't grow at a constant rate; it fluctuates. These fluctuations create a cyclical pattern known as the Business Cycle. It's like a rollercoaster with ups (expansions) and downs (contractions).
• Think of it like a heartbeat – it has periods of high activity (expansion) and low activity (contraction). 💓

#Parts of the Business Cycle

#Visualizing the Cycle

• This graph shows how real GDP (a measure of output) changes over time. The growth trend line represents the ideal, sustainable growth rate.

#1. Expansion Phase (Inflationary Gap)

• What it is: The economy is growing, like a plant sprouting in spring. 🌱
• Key Characteristics:
  • GDP is increasing.
  • Unemployment is low (more people have jobs). 🧑‍🏭
  • Inflation is rising...