{"id":395,"date":"2015-05-04T22:01:09","date_gmt":"2015-05-04T22:01:09","guid":{"rendered":"https:\/\/courses.candelalearning.com\/masterymacro1xngcxmaster\/?post_type=chapter&#038;p=395"},"modified":"2018-05-09T14:48:19","modified_gmt":"2018-05-09T14:48:19","slug":"business-cycles","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/oldwestbury-wm-macroeconomics\/chapter\/business-cycles\/","title":{"raw":"Business Cycles","rendered":"Business Cycles"},"content":{"raw":"<div class=\"textbox learning-objectives\">\r\n<h3>Learning Objectives<\/h3>\r\n<ul>\r\n \t<li>Explain business cycles, including recessions, depressions, peaks, and troughs<\/li>\r\n<\/ul>\r\n<\/div>\r\n<h2>Tracking Real GDP Over Time<\/h2>\r\nWhen news reports indicate that \u201cthe economy grew 1.2% in the first quarter,\u201d the reports are referring to the percentage change in real GDP. By convention, GDP growth is reported at an annualized rate: whatever the calculated growth in real GDP was for the quarter, it is multiplied by four when it is reported as if the economy were growing at that rate for a full year.\r\n\r\n[caption id=\"attachment_10827\" align=\"aligncenter\" width=\"462\"]<img class=\"wp-image-10827 \" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/2043\/2015\/05\/08134310\/Screen-Shot-2018-05-08-at-8.42.48-AM.png\" alt=\"The graph illustrates that both real GDP and real GDP per capita have substantially increased since 1900.\" width=\"462\" height=\"302\" \/> <strong>Figure 1.\u00a0U.S. GDP, 1900\u20132016.<\/strong> Real GDP in the United States in 2016 (in 2009 dollars) was about $16.7 trillion. After adjusting to remove the effects of inflation, this represents a roughly 20-fold increase in the economy\u2019s production of goods and services since the start of the twentieth century. (Source: bea.gov)[\/caption]\r\n\r\nFigure 1\u00a0shows the pattern of U.S. real GDP since 1900. The generally upward long-term path of GDP has been regularly interrupted by short-term declines. A significant decline in real GDP is called a\u00a0<strong>recession<\/strong>. Recessions typically last at least six months (or two quarters).\u00a0 An especially lengthy and deep recession is called a\u00a0<strong>depression<\/strong>. The severe drop in GDP that occurred during the\u00a0<span class=\"no-emphasis\">Great Depression<\/span>\u00a0of the 1930s is clearly visible in the figure, as is the\u00a0<span class=\"no-emphasis\">Great Recession<\/span>\u00a0of 2008\u20132009.\r\n\r\nReal GDP is important because it is highly correlated with other measures of economic activity, like employment and unemployment. When real GDP rises, so does employment.\r\n\r\nThe most significant human problem associated with recessions (and their larger, uglier cousins, depressions) is that a slowdown in production means that firms need to lay off or fire some of the workers they have. Losing a job imposes painful financial and personal costs on workers, and often on their extended families as well. In addition, even those who keep their jobs are likely to find that wage raises are scanty at best\u2014they may even be asked to take pay cuts or work reduced\u00a0hours.\r\n\r\nTable 1 lists the pattern of recessions and expansions in the U.S. economy since 1900. The highest point of the economy, before the recession begins, is called the <strong>peak<\/strong>; conversely, the lowest point of a recession, before a recovery begins, is called the <strong>trough<\/strong>. Thus, a recession lasts from peak to trough, and an economic upswing runs from trough to peak. The movement of the economy from peak to trough and trough to peak is called the <strong>business cycle<\/strong>. It is intriguing to notice that the three longest trough-to-peak expansions of the twentieth century have happened since 1960. The most recent recession started in December 2007 and ended formally in June 2009. This was the most severe recession since the Great Depression of the 1930s.\r\n\r\n[caption id=\"attachment_10164\" align=\"aligncenter\" width=\"484\"]<img class=\"wp-image-10164\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/2043\/2015\/05\/19035153\/Screen-Shot-2018-04-18-at-10.51.21-PM.png\" alt=\"Graph showing time on the y-axis and the level of business activity, or gdp, on the x-axis. Lines show expansion up to a peak, then a downward recession to a trough, then recovery and expansion.\" width=\"484\" height=\"346\" \/> <strong>Figure 2. The Business Cycle.<\/strong> This is an example of a typical business cycle showing expansion, recession, then recovery. The growth trend is the average growth rate over time.[\/caption]\r\n<table>\r\n<thead>\r\n<tr>\r\n<th colspan=\"4\">Table 1. U.S. Business Cycles since 1900<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<th width=\"33%\">Trough<\/th>\r\n<th width=\"33%\">Peak<\/th>\r\n<th width=\"17%\">Months of Contraction<\/th>\r\n<th width=\"17%\">Months of Expansion<\/th>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0December 1900<\/td>\r\n<td>\u00a0September 1902<\/td>\r\n<td>\u00a018<\/td>\r\n<td>\u00a021<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0August 1904<\/td>\r\n<td>\u00a0May 1907<\/td>\r\n<td>\u00a023<\/td>\r\n<td>\u00a033<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0June 1908<\/td>\r\n<td>\u00a0January 1910<\/td>\r\n<td>\u00a013<\/td>\r\n<td>\u00a019<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0January 1912<\/td>\r\n<td>\u00a0January 1913<\/td>\r\n<td>\u00a024<\/td>\r\n<td>\u00a012<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0December 1914<\/td>\r\n<td>\u00a0August 1918<\/td>\r\n<td>\u00a023<\/td>\r\n<td>\u00a044<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0March 1919<\/td>\r\n<td>\u00a0January 1920<\/td>\r\n<td>\u00a07<\/td>\r\n<td>\u00a010<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0July 1921<\/td>\r\n<td>\u00a0May 1923<\/td>\r\n<td>\u00a018<\/td>\r\n<td>\u00a022<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0July 1924<\/td>\r\n<td>\u00a0October 1926<\/td>\r\n<td>\u00a014<\/td>\r\n<td>\u00a027<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0November 1927<\/td>\r\n<td>\u00a0August 1929<\/td>\r\n<td>\u00a023<\/td>\r\n<td>\u00a021<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0March 1933<\/td>\r\n<td>\u00a0May 1937<\/td>\r\n<td>\u00a043<\/td>\r\n<td>\u00a050<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0June 1938<\/td>\r\n<td>\u00a0February 1945<\/td>\r\n<td>\u00a013<\/td>\r\n<td>\u00a080<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0October 1945<\/td>\r\n<td>\u00a0November 1948<\/td>\r\n<td>\u00a08<\/td>\r\n<td>\u00a037<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0October 1949<\/td>\r\n<td>\u00a0July 1953<\/td>\r\n<td>\u00a011<\/td>\r\n<td>\u00a045<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0May 1954<\/td>\r\n<td>\u00a0August 1957<\/td>\r\n<td>\u00a010<\/td>\r\n<td>\u00a039<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0April 1958<\/td>\r\n<td>\u00a0April 1960<\/td>\r\n<td>\u00a08<\/td>\r\n<td>\u00a024<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0February 1961<\/td>\r\n<td>\u00a0December 1969<\/td>\r\n<td>\u00a010<\/td>\r\n<td>\u00a0106<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0November 1970<\/td>\r\n<td>\u00a0November 1973<\/td>\r\n<td>\u00a011<\/td>\r\n<td>\u00a036<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0March 1975<\/td>\r\n<td>\u00a0January 1980<\/td>\r\n<td>\u00a016<\/td>\r\n<td>\u00a058<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0July 1980<\/td>\r\n<td>\u00a0July 1981<\/td>\r\n<td>\u00a06<\/td>\r\n<td>\u00a012<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0November 1982<\/td>\r\n<td>\u00a0July 1990<\/td>\r\n<td>\u00a016<\/td>\r\n<td>\u00a092<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0March 2001<\/td>\r\n<td>\u00a0November 2001<\/td>\r\n<td>\u00a08<\/td>\r\n<td>\u00a0120<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\u00a0December 2007<\/td>\r\n<td>\u00a0June 2009<\/td>\r\n<td>\u00a018<\/td>\r\n<td>\u00a073<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<tfoot>\r\n<tr>\r\n<td colspan=\"4\"><span class=\"cnx-gentext-caption cnx-gentext-t\">Source: http:\/\/www.nber.org\/cycles\/main.html<\/span><\/td>\r\n<\/tr>\r\n<\/tfoot>\r\n<\/table>\r\nA private think tank, the <em class=\"glossterm no-emphasis\">National Bureau of Economic Research<\/em>, is the official tracker of business cycles for the U.S. economy. However, the effects of a severe recession often linger on after the official ending date assigned by the NBER.\r\n<div class=\"textbox tryit\">\r\n<h3>Try It<\/h3>\r\nhttps:\/\/assessments.lumenlearning.com\/assessments\/7459\r\n\r\n<\/div>\r\n<div class=\"textbox examples\">\r\n<h3>Watch It<\/h3>\r\nWatch this short video for another explanation of business cycles.\r\n<iframe src=\"https:\/\/www.youtube.com\/embed\/jGP-vPEHRRE?rel=0\" width=\"800\" height=\"470\" frameborder=\"0\"><\/iframe>\r\n\r\n<\/div>\r\n<h2>Business Cycle Vocabulary<\/h2>\r\nOther terminology to know in relation to the ebbs and flows of the business cycle include:\r\n<ul>\r\n \t<li><strong>Overheating<\/strong>, which<strong>\u00a0<\/strong>means the economy is picking up speed leading to increased inflation.\u00a0It\u00a0occurs when its productive capacity is unable to keep pace with growing aggregate demand. It is generally characterized by an above-trend rate of economic growth, where growth is occurring at an unsustainable rate. Boom periods are often characterized by overheating in the economy.<\/li>\r\n \t<li><strong>Stagflation<\/strong>, which<strong>\u00a0<\/strong>means the simultaneous occurrence of stagnant growth (or recession) and inflation.\u00a0<del>I<\/del>t is a situation where the inflation rate is high, the economic growth rate slows down, and unemployment is also high. It raises a dilemma for economic policy since actions designed to lower inflation may exacerbate unemployment, and vice versa.<\/li>\r\n<\/ul>\r\n<div class=\"textbox learning-objectives\">\r\n<h3>Glossary<\/h3>\r\n<dl>[glossary-page]<\/dl>\r\n<dl>[glossary-term]business cycle: [\/glossary-term][glossary-definition]the relatively short-term movement of the economy from recession to expansion [\/glossary-definition]<\/dl>\r\n<dl>[glossary-term]depression: [\/glossary-term][glossary-definition]an especially lengthy and deep decline in output[\/glossary-definition]<\/dl>\r\n<dl>[glossary-term]peak: [\/glossary-term][glossary-definition]during the business cycle, the highest point of output before a recession begins[\/glossary-definition]<\/dl>\r\n<dl>[glossary-term]recession: [\/glossary-term][glossary-definition]a significant decline in national output. typically lasting a minimum of six months[\/glossary-definition]<\/dl>\r\n<dl id=\"fs-idp4290944\">[glossary-term]trough: [\/glossary-term][glossary-definition]during the business cycle, the lowest point of output in a recession, before a recovery begins[\/glossary-definition]\r\n \t<dt>[\/glossary-page]<\/dt>\r\n<\/dl>\r\n<\/div>","rendered":"<div class=\"textbox learning-objectives\">\n<h3>Learning Objectives<\/h3>\n<ul>\n<li>Explain business cycles, including recessions, depressions, peaks, and troughs<\/li>\n<\/ul>\n<\/div>\n<h2>Tracking Real GDP Over Time<\/h2>\n<p>When news reports indicate that \u201cthe economy grew 1.2% in the first quarter,\u201d the reports are referring to the percentage change in real GDP. By convention, GDP growth is reported at an annualized rate: whatever the calculated growth in real GDP was for the quarter, it is multiplied by four when it is reported as if the economy were growing at that rate for a full year.<\/p>\n<div id=\"attachment_10827\" style=\"width: 472px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-10827\" class=\"wp-image-10827\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/2043\/2015\/05\/08134310\/Screen-Shot-2018-05-08-at-8.42.48-AM.png\" alt=\"The graph illustrates that both real GDP and real GDP per capita have substantially increased since 1900.\" width=\"462\" height=\"302\" \/><\/p>\n<p id=\"caption-attachment-10827\" class=\"wp-caption-text\"><strong>Figure 1.\u00a0U.S. GDP, 1900\u20132016.<\/strong> Real GDP in the United States in 2016 (in 2009 dollars) was about $16.7 trillion. After adjusting to remove the effects of inflation, this represents a roughly 20-fold increase in the economy\u2019s production of goods and services since the start of the twentieth century. (Source: bea.gov)<\/p>\n<\/div>\n<p>Figure 1\u00a0shows the pattern of U.S. real GDP since 1900. The generally upward long-term path of GDP has been regularly interrupted by short-term declines. A significant decline in real GDP is called a\u00a0<strong>recession<\/strong>. Recessions typically last at least six months (or two quarters).\u00a0 An especially lengthy and deep recession is called a\u00a0<strong>depression<\/strong>. The severe drop in GDP that occurred during the\u00a0<span class=\"no-emphasis\">Great Depression<\/span>\u00a0of the 1930s is clearly visible in the figure, as is the\u00a0<span class=\"no-emphasis\">Great Recession<\/span>\u00a0of 2008\u20132009.<\/p>\n<p>Real GDP is important because it is highly correlated with other measures of economic activity, like employment and unemployment. When real GDP rises, so does employment.<\/p>\n<p>The most significant human problem associated with recessions (and their larger, uglier cousins, depressions) is that a slowdown in production means that firms need to lay off or fire some of the workers they have. Losing a job imposes painful financial and personal costs on workers, and often on their extended families as well. In addition, even those who keep their jobs are likely to find that wage raises are scanty at best\u2014they may even be asked to take pay cuts or work reduced\u00a0hours.<\/p>\n<p>Table 1 lists the pattern of recessions and expansions in the U.S. economy since 1900. The highest point of the economy, before the recession begins, is called the <strong>peak<\/strong>; conversely, the lowest point of a recession, before a recovery begins, is called the <strong>trough<\/strong>. Thus, a recession lasts from peak to trough, and an economic upswing runs from trough to peak. The movement of the economy from peak to trough and trough to peak is called the <strong>business cycle<\/strong>. It is intriguing to notice that the three longest trough-to-peak expansions of the twentieth century have happened since 1960. The most recent recession started in December 2007 and ended formally in June 2009. This was the most severe recession since the Great Depression of the 1930s.<\/p>\n<div id=\"attachment_10164\" style=\"width: 494px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-10164\" class=\"wp-image-10164\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/2043\/2015\/05\/19035153\/Screen-Shot-2018-04-18-at-10.51.21-PM.png\" alt=\"Graph showing time on the y-axis and the level of business activity, or gdp, on the x-axis. Lines show expansion up to a peak, then a downward recession to a trough, then recovery and expansion.\" width=\"484\" height=\"346\" \/><\/p>\n<p id=\"caption-attachment-10164\" class=\"wp-caption-text\"><strong>Figure 2. The Business Cycle.<\/strong> This is an example of a typical business cycle showing expansion, recession, then recovery. The growth trend is the average growth rate over time.<\/p>\n<\/div>\n<table>\n<thead>\n<tr>\n<th colspan=\"4\">Table 1. U.S. Business Cycles since 1900<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<th style=\"width: 33%;\">Trough<\/th>\n<th style=\"width: 33%;\">Peak<\/th>\n<th style=\"width: 17%;\">Months of Contraction<\/th>\n<th style=\"width: 17%;\">Months of Expansion<\/th>\n<\/tr>\n<tr>\n<td>\u00a0December 1900<\/td>\n<td>\u00a0September 1902<\/td>\n<td>\u00a018<\/td>\n<td>\u00a021<\/td>\n<\/tr>\n<tr>\n<td>\u00a0August 1904<\/td>\n<td>\u00a0May 1907<\/td>\n<td>\u00a023<\/td>\n<td>\u00a033<\/td>\n<\/tr>\n<tr>\n<td>\u00a0June 1908<\/td>\n<td>\u00a0January 1910<\/td>\n<td>\u00a013<\/td>\n<td>\u00a019<\/td>\n<\/tr>\n<tr>\n<td>\u00a0January 1912<\/td>\n<td>\u00a0January 1913<\/td>\n<td>\u00a024<\/td>\n<td>\u00a012<\/td>\n<\/tr>\n<tr>\n<td>\u00a0December 1914<\/td>\n<td>\u00a0August 1918<\/td>\n<td>\u00a023<\/td>\n<td>\u00a044<\/td>\n<\/tr>\n<tr>\n<td>\u00a0March 1919<\/td>\n<td>\u00a0January 1920<\/td>\n<td>\u00a07<\/td>\n<td>\u00a010<\/td>\n<\/tr>\n<tr>\n<td>\u00a0July 1921<\/td>\n<td>\u00a0May 1923<\/td>\n<td>\u00a018<\/td>\n<td>\u00a022<\/td>\n<\/tr>\n<tr>\n<td>\u00a0July 1924<\/td>\n<td>\u00a0October 1926<\/td>\n<td>\u00a014<\/td>\n<td>\u00a027<\/td>\n<\/tr>\n<tr>\n<td>\u00a0November 1927<\/td>\n<td>\u00a0August 1929<\/td>\n<td>\u00a023<\/td>\n<td>\u00a021<\/td>\n<\/tr>\n<tr>\n<td>\u00a0March 1933<\/td>\n<td>\u00a0May 1937<\/td>\n<td>\u00a043<\/td>\n<td>\u00a050<\/td>\n<\/tr>\n<tr>\n<td>\u00a0June 1938<\/td>\n<td>\u00a0February 1945<\/td>\n<td>\u00a013<\/td>\n<td>\u00a080<\/td>\n<\/tr>\n<tr>\n<td>\u00a0October 1945<\/td>\n<td>\u00a0November 1948<\/td>\n<td>\u00a08<\/td>\n<td>\u00a037<\/td>\n<\/tr>\n<tr>\n<td>\u00a0October 1949<\/td>\n<td>\u00a0July 1953<\/td>\n<td>\u00a011<\/td>\n<td>\u00a045<\/td>\n<\/tr>\n<tr>\n<td>\u00a0May 1954<\/td>\n<td>\u00a0August 1957<\/td>\n<td>\u00a010<\/td>\n<td>\u00a039<\/td>\n<\/tr>\n<tr>\n<td>\u00a0April 1958<\/td>\n<td>\u00a0April 1960<\/td>\n<td>\u00a08<\/td>\n<td>\u00a024<\/td>\n<\/tr>\n<tr>\n<td>\u00a0February 1961<\/td>\n<td>\u00a0December 1969<\/td>\n<td>\u00a010<\/td>\n<td>\u00a0106<\/td>\n<\/tr>\n<tr>\n<td>\u00a0November 1970<\/td>\n<td>\u00a0November 1973<\/td>\n<td>\u00a011<\/td>\n<td>\u00a036<\/td>\n<\/tr>\n<tr>\n<td>\u00a0March 1975<\/td>\n<td>\u00a0January 1980<\/td>\n<td>\u00a016<\/td>\n<td>\u00a058<\/td>\n<\/tr>\n<tr>\n<td>\u00a0July 1980<\/td>\n<td>\u00a0July 1981<\/td>\n<td>\u00a06<\/td>\n<td>\u00a012<\/td>\n<\/tr>\n<tr>\n<td>\u00a0November 1982<\/td>\n<td>\u00a0July 1990<\/td>\n<td>\u00a016<\/td>\n<td>\u00a092<\/td>\n<\/tr>\n<tr>\n<td>\u00a0March 2001<\/td>\n<td>\u00a0November 2001<\/td>\n<td>\u00a08<\/td>\n<td>\u00a0120<\/td>\n<\/tr>\n<tr>\n<td>\u00a0December 2007<\/td>\n<td>\u00a0June 2009<\/td>\n<td>\u00a018<\/td>\n<td>\u00a073<\/td>\n<\/tr>\n<\/tbody>\n<tfoot>\n<tr>\n<td colspan=\"4\"><span class=\"cnx-gentext-caption cnx-gentext-t\">Source: http:\/\/www.nber.org\/cycles\/main.html<\/span><\/td>\n<\/tr>\n<\/tfoot>\n<\/table>\n<p>A private think tank, the <em class=\"glossterm no-emphasis\">National Bureau of Economic Research<\/em>, is the official tracker of business cycles for the U.S. economy. However, the effects of a severe recession often linger on after the official ending date assigned by the NBER.<\/p>\n<div class=\"textbox tryit\">\n<h3>Try It<\/h3>\n<p>\t<iframe id=\"lumen_assessment_7459\" class=\"resizable\" src=\"https:\/\/assessments.lumenlearning.com\/assessments\/load?assessment_id=7459&#38;embed=1&#38;external_user_id=&#38;external_context_id=&#38;iframe_resize_id=lumen_assessment_7459\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:400px;\"><br \/>\n\t<\/iframe><\/p>\n<\/div>\n<div class=\"textbox examples\">\n<h3>Watch It<\/h3>\n<p>Watch this short video for another explanation of business cycles.<br \/>\n<iframe loading=\"lazy\" src=\"https:\/\/www.youtube.com\/embed\/jGP-vPEHRRE?rel=0\" width=\"800\" height=\"470\" frameborder=\"0\"><\/iframe><\/p>\n<\/div>\n<h2>Business Cycle Vocabulary<\/h2>\n<p>Other terminology to know in relation to the ebbs and flows of the business cycle include:<\/p>\n<ul>\n<li><strong>Overheating<\/strong>, which<strong>\u00a0<\/strong>means the economy is picking up speed leading to increased inflation.\u00a0It\u00a0occurs when its productive capacity is unable to keep pace with growing aggregate demand. It is generally characterized by an above-trend rate of economic growth, where growth is occurring at an unsustainable rate. Boom periods are often characterized by overheating in the economy.<\/li>\n<li><strong>Stagflation<\/strong>, which<strong>\u00a0<\/strong>means the simultaneous occurrence of stagnant growth (or recession) and inflation.\u00a0<del>I<\/del>t is a situation where the inflation rate is high, the economic growth rate slows down, and unemployment is also high. It raises a dilemma for economic policy since actions designed to lower inflation may exacerbate unemployment, and vice versa.<\/li>\n<\/ul>\n<div class=\"textbox learning-objectives\">\n<h3>Glossary<\/h3>\n<dl><\/dl>\n<dl>             <\/dl>\n<dl>        <\/dl>\n<dl>             <\/dl>\n<dl>             <\/dl>\n<dl id=\"fs-idp4290944\">\n<dt>[\/glossary-page]<\/dt>\n<\/dl>\n<\/div>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-395\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Modification, adaptation, and original content. <strong>Authored by<\/strong>: Steven Greenlaw and Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-sa\/4.0\/\">CC BY-SA: Attribution-ShareAlike<\/a><\/em><\/li><li>The Business Cycle Image. <strong>Authored by<\/strong>: Sophie Haci. <strong>Provided by<\/strong>: Houston Community College. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li>Tracking Real GDP over Time. <strong>Authored by<\/strong>: OpenStax College. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/cnx.org\/contents\/vEmOH-_p@4.44:q0M-qJRG@7\/Tracking-Real-GDP-over-Time\">https:\/\/cnx.org\/contents\/vEmOH-_p@4.44:q0M-qJRG@7\/Tracking-Real-GDP-over-Time<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em>. <strong>License Terms<\/strong>: Download for free at http:\/\/cnx.org\/contents\/bc498e1f-efe9-43a0-8dea-d3569ad09a82@4.44<\/li><li>Stagflation. <strong>Provided by<\/strong>: Wikipeda. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"http:\/\/en.wikipedia.org\/wiki\/Stagflation\">http:\/\/en.wikipedia.org\/wiki\/Stagflation<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><li>Overheating. <strong>Provided by<\/strong>: Wikipedia. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"http:\/\/en.wikipedia.org\/wiki\/Overheating_%28economics%29\">http:\/\/en.wikipedia.org\/wiki\/Overheating_%28economics%29<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-sa\/4.0\/\">CC BY-SA: Attribution-ShareAlike<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">All rights reserved content<\/div><ul class=\"citation-list\"><li>(Macro) Episode 23: Business Cycles. <strong>Authored by<\/strong>: Dr. Mary J. McGlasson. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/www.youtube.com\/watch?time_continue=14&#038;v=jGP-vPEHRRE\">https:\/\/www.youtube.com\/watch?time_continue=14&#038;v=jGP-vPEHRRE<\/a>. <strong>License<\/strong>: <em>Other<\/em>. <strong>License Terms<\/strong>: Standard YouTube License<\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":74,"menu_order":13,"template":"","meta":{"_candela_citation":"[{\"type\":\"cc\",\"description\":\"Tracking Real GDP over Time\",\"author\":\"OpenStax College\",\"organization\":\"\",\"url\":\"https:\/\/cnx.org\/contents\/vEmOH-_p@4.44:q0M-qJRG@7\/Tracking-Real-GDP-over-Time\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"Download for free at http:\/\/cnx.org\/contents\/bc498e1f-efe9-43a0-8dea-d3569ad09a82@4.44\"},{\"type\":\"cc\",\"description\":\"Stagflation\",\"author\":\"\",\"organization\":\"Wikipeda\",\"url\":\"http:\/\/en.wikipedia.org\/wiki\/Stagflation\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"},{\"type\":\"cc\",\"description\":\"Overheating\",\"author\":\"\",\"organization\":\"Wikipedia\",\"url\":\"http:\/\/en.wikipedia.org\/wiki\/Overheating_%28economics%29\",\"project\":\"\",\"license\":\"cc-by-sa\",\"license_terms\":\"\"},{\"type\":\"original\",\"description\":\"Modification, adaptation, and original content\",\"author\":\"Steven Greenlaw and Lumen Learning\",\"organization\":\"\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by-sa\",\"license_terms\":\"\"},{\"type\":\"copyrighted_video\",\"description\":\"(Macro) Episode 23: Business Cycles\",\"author\":\"Dr. Mary J. 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