AP®︎ Macroeconomics: Topic 2.7 Flashcards

Master key terms and definitions for Topic 2.7 of AP Macroeconomics – Business Cycles to help you prep for quizzes and the AP exam.

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Term

Business Cycle

Definition

Short-run fluctuations in real output and employment around the economy's long-run growth trend.

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Business Cycle
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Short-run fluctuations in real output and employment around the economy's long-run growth trend.

MEA-2.AMEA-2.A.1
Expansion and Recession
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Expansion is rising real GDP and employment; recession is declining real GDP and employment.

MEA-2.AMEA-2.A.2
Peak and Trough
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Peak is the highest point before decline; trough is the lowest point before recovery.

MEA-2.AMEA-2.A.3
Output Gap
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The difference between actual real GDP and potential real GDP.

MEA-2.AMEA-2.A.4
Potential Output / Full-Employment Output
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The real GDP level produced when unemployment equals the natural rate.

MEA-2.AMEA-2.A.5
Inflationary Gap and Recessionary Gap
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Inflationary gap means actual output exceeds potential; recessionary gap means actual output is below potential.

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