A and B

ENDURING UNDERSTANDING MEA-2 The economy fluctuates between periods of expansion and contraction in the short run, but economic growth can occur in the long run. LEARNING OBJECTIVE ESSENTIAL KNOWLEDGE MEA-2.4.1 a. Define (using graphs Business cycles are fluctuations in aggregate and data as appropriate) output and employment because of changes in turning points and phases aggregate supply and/or aggregate demand. of the business cycle. MEA-2.4.2 b. Explain (using graphs The phases of a business cycle are recession and data as appropriate) and expansion. turning points and phases of the business cycle. MEA-2.A.S The turning points of a business cycle are peak and trough. MEA-2.Ad The difference between actual output and potential output is the output gap. MEA-2.AS Potential output is also called full-employment output. It is the level of GDP where unemployment is equal to the natural rate of unemployment. [See EK MEA-1.E.2]