Recovery: The period where the economy moves between a recession and a boom.
Boom: This period is fast economic growth. Output is very high due to increase in demand, and
unemployment is very low. Additionally, consumers may be confident about the economy
so this may lead to extra spending
Recession: Economic Growth slows down and level of output may have a negative impact.
Unemployment increases and consumers are likely to save instead of spend, so there is
less money circulating in the economy.
Slump: A period where output starts to decrease. Consumer confidence may also begin to deplete.
GDP: The total or national output of a country over a period of time.
- It measures the total amount of income earned in a macro economy – national income.
- Changes used to measure economic growth – Real change in GDP over time.
- National Output = National Income = National Expenditure
- Total value of output produced by all domestic firms within economy.
- GDP = Consumption + Government Expenditure + Investment + Net imports
- Some of the output income will flow overseas, as people from other countries may achieve output in your economy
- GDP is measured in terms of money.
- However, money is subject to change in its value and inflation. To solve this problem, the real value of output or GDP is adjusted for inflation so we know how much is really generated from economic growth and how much is simply due to rising prices.