Macroeconomics: The Big Picture

KEY TAKEAWAYS

• Real gross domestic product (real GDP) is a measure of the value of all final goods and services produced during a particular year or period, adjusted to eliminate the effects of price changes.
• The economy follows a path of expansion, then contraction, then expansion again. These fluctuations make up the business cycle.
• The point at which an expansion becomes a recession is called the peak of a business cycle; the point at which a recession becomes an expansion is called the trough.
• Over time, the general trend for most economies is one of rising real GDP. On average, real GDP in the United States has grown at a rate of over 3% per year since 1960.