Economic Slowdown: Definition & Overview

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  • 0:00 What Is an Economic Slowdown?
  • 0:21 Measuring Changes in GDP
  • 0:50 The Business Cycle
  • 2:00 Lesson Summary
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Lesson Transcript
Instructor: Shawn Grimsley
Economies fluctuate up and down. Sometimes economies will speed up, and sometimes they will slow down. In this lesson, you'll learn about economic slowdowns and their role in the business cycle.

What Is an Economic Slowdown?

An economic slowdown occurs when the rate of economic growth slows in an economy. Countries usually measure economic growth in terms of gross domestic product (GDP), which is the total value of goods and services produced in an economy during a specific period of time.

Measuring Changes in GDP

The rate of economic growth or decline is calculated by determining the percentage change in GDP from one period to another. For example, the value of a country's GDP in the second quarter of this year may have increased 2% from the value from the first quarter GDP. On the other hand, if GDP rose only 1.5% between the second quarter and the third quarter, we can say that the economy is slowing down because it is not growing as fast.

The Business Cycle

Economic fluctuations are explained by the business cycle. The cycle starts at an economic peak where growth has reached its highest point in the cycle, which is then followed by a decline in growth--the economic slowdown we have been discussing.

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