Business Cycles

What this video covers

• How the business cycle tracks changes in economic activity through real, inflation-adjusted gross domestic product (GDP)
• Why a recession requires two consecutive quarters of declining real GDP, while a depression has no fixed quarter count
• How to remember the four stages in order: trough, expansion, peak, contraction, or the TEPC cycle
• What happens to unemployment, inflation, interest rates, and consumer demand during each stage
• Why GDP remains positive at the peak, and why contraction begins after the peak
• How stock prices lead the business cycle, while bond prices move inversely to interest rates
• How the Federal Reserve uses contractionary policy to cool an expansion and expansionary policy to support a contraction