Google
Friday 
May 29, 2020 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
WORLD TRADE ORGANIZATION: An international organization that oversees multilateral trade among nations. The World Trade Organization, or WTO, was established in 1995 by the Uruguay round of trade negotiations to replace the General Agreement on Tariffs and Trade (GATT) that had been in place for the preceding five decades. The WTO administers multilateral trade agreements, provides a forum for trade negotiations, handles trade disputes, monitors national trade policies, and provides technical assistance and training for developing countries. The WTO has about 150 member countries.

Visit the GLOSS*arama


TROUGH:

The transition of a business-cycle contraction to a business-cycle expansion. The end of a contraction carries this descriptive term of trough, or the lowest level of economic activity reached in recent times. A trough is one of two turning points. The other, the transition from expansion to contraction, is a peak. Turning points are important because they represent the transition from bad to good or good to bad.
A business-cycle trough means the economy has reached the lowest level of production in recent times. Fortunately, because a trough is a turning point, it means that an expansion is about to begin. Even though a trough is the "lowest," this is not such a bad thing for the economy. It means the economy is making the turn toward prosperity.

A Graphical Bottom

The Lowest Turning Point
Business Cycle
The diagram at the right presents a simple business cycle. The red line represents the value of real gross domestic product (real GDP) over a period of several months. The blue line is potential real GDP, the amount of real GDP that the economy could produce by fully employing all resources. A business-cycle contraction is indicated as the decrease in real GDP from point A to point B.

While contractions are generally bad, fortunately they do not last forever. At least none have so far. There is always fear that the "current" contraction will not end. And people sometimes dismally think that it will not. But so far every contraction has ended. A click of the [Trough] button highlights the business cycle trough at point B which ends the contraction displayed here.

A Lot of Unemployment

Because the trough of a business cycle inevitably lies below the long-run trend, an increase in unemployment occurs. Because the long-run trend represents full employment, when real GDP is less than the potential real GDP, then the economy is trying to produce less than it could by fully employ all resources. The result is unemployment.

Tracking the Numbers

Like other aspects of business cycles, a trough is officially identified by the official business-cycle watchers at the National Bureau of Economic Research. Inevitably an official trough is only officially designated a year or two after the fact, once all of the relevant data has been processed and analyzed.

While knowing when a trough did occur is useful information, anticipating when one will occur is also helpful. Knowing when the current contraction will end and the next expansion will begin makes it possible for consumers and businesses to plan for the ensuing good times. Forecasting a trough is perhaps most useful for government leaders who can implement timely stabilization policies.

Forecasting upcoming troughs is commonly attempted using leading economic indicators, a series of ten economic statistics that tend to reach their "trough" three to twelve months before the actual business cycle. More sophisticated forecasts are also provided by complex mathematical models of the economy.

<= TRANSFER PAYMENTSTWO-SECTOR AGGREGATE EXPENDITURES LINE =>


Recommended Citation:

TROUGH, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2020. [Accessed: May 29, 2020].


Check Out These Related Terms...

     | business cycles | business cycle phases | expansion | contraction | peak | recovery | recession | potential real gross domestic product | long-run trend |


Or For A Little Background...

     | unemployment | inflation | full employment | macroeconomics | macroeconomic goals | mixed economy | economic analysis | production possibilities | efficiency | model |


And For Further Study...

     | business cycle indicators | supply-driven business cycles | stabilization policies | investment business cycles | political business cycles | demand-driven business cycles |


Search Again?

Back to the WEB*pedia


APLS

BEIGE MUNDORTLE
[What's This?]

Today, you are likely to spend a great deal of time visiting every yard sale in a 30-mile radius looking to buy either clothing for your pet iguana or a set of hubcaps. Be on the lookout for small children selling products door-to-door.
Your Complete Scope

This isn't me! What am I?

Post WWI induced hyperinflation in German in the early 1900s raised prices by 726 million times from 1918 to 1923.
"Never let the fear of striking out get in your way. "

-- Babe Ruth

SMA
Structural Moving Average
A PEDestrian's Guide
Xtra Credit
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.

User Feedback



| AmosWEB | WEB*pedia | GLOSS*arama | ECON*world | CLASS*portal | QUIZ*tastic | PED Guide | Xtra Credit | eTutor | A*PLS |
| About Us | Terms of Use | Privacy Statement |

Thanks for visiting AmosWEB
Copyright ©2000-2020 AmosWEB*LLC
Send comments or questions to: WebMaster