Gross Domestic Product refers to the market value of all final goods and services produced in a country in a given period. Gross Domestic Product is often considered an indicator of country’s standard of living. it is also the official measure of total output of goods and services in the U.S. economy, represents the capstone and grand summary of the world's best system of economic statistics. The federal government organizes millions of pieces of monthly, quarterly, and annual data from government agencies, companies, and private individuals into hundreds of statistics, such as the consumer price index (CPI), the employment report, and summaries of corporate and individual tax returns. The U.S. Department of Commerce then marshals the source data into a complete set of statistics known as the National Income and Product Accounts. This set of double-entry accounts provides a consistent and detailed representation of production in the United States We first turn our attention to changes in GDP. We know that both real and nominal GDP have grown over time, but it is also true that GDP exhibits cyclical behavior: it rises for a period of time then falls for a period time. This cycle of alternating growth and contraction in GDP is known as the business cycle.
Business cycles are a powerful thing. The Great Depression of the 1930s shaped the attitudes and behaviors of a generation of Americans. The contraction in GDP in 1990-91 most likely cost George Bush re-election. Do you remember the slogan of President Clinton's successful 1992 campaign? "It's the economy, stupid."
Even in the 2000 election, some were baffled that the economic expansion of the 1990s did not give Al Gore a victory.
Business cycles are also a controversial thing. There is substantial disagreement among macroeconomists about the causes of business cycles and what, if anything, should be done about them.
All About Business Cycles
We measure a business cycle by changes in real GDP, so we are...