This chapter is all about short term fluctuations in the economy – recessions and booms. After reading the chapter what do you think about the current US (or Colorado) economy? Is a recession coming soon? Why or why not? Is the economy in danger of overheating? Why or why not? (This is part of why you take economics — to forecast the future. Economists are notoriously bad at that, but it is still a useful exercise to ensure you understand what might drive changes in the economy.)
To determine if a recession is coming soon, economists look at certain factors like GDP, interests rates, unemployment, and price levels. A recession is pretty much when the economy stops growing and eventually starts shrinking. Also, a decline in the in the gross domestic product growth. GDP is only reported after the quarter is over, by the time it had turned negative, the recession may have already started. If this happens for two consecutive quarters (six months) is when a recession starts.
An overheated economy is one that is expanding at a rate that is unsustainable. One that has also experience a prolonged period of good economic growth Rising rates of inflation are typically one of the first signs that an economy is overheating. Therefore, I do not think the economy is overheating. However, recently I have heard and read that economist predict a recession around the elections of 2020. I would like to read more about that and understand why.
Netsy's Thoughts 