2.1: Defining GDP and the Business Cycle
Read this chapter and attempt the "Try It" exercises. Also, complete the concept problems and the numerical problems at the end of the chapter. In the first section of this chapter, you will read about the definition of Gross Domestic Product and some of the issues around measuring it. You will also learn about the 4 phases of the business cycle. As you will see, the economy goes through naturally alternating periods of economic growth and recession. You will review certain sections of this chapter later in the unit.
- Watch these three videos to analyze the definition of Gross Domestic product and the ways in which this definition avoids double-counting and the effects of price changes.
- Watch these two videos to explore the components of the business cycle. As you will see, the business cycle is largely driven by the emotions of the market participants. Bouts of optimism can spur demand and increase economic activity whereas negative expectations can precipitate economic decline.
- Explore the Bureau of Economic Analysis website to find out current real time measures of economic indicators such as GDP, unemployment, inflation, etc.