The 4 stages:
1. Recovery - GDP increases, unemployment rate decreases, aggregrate demand increases, price increases
2. Boom -Beginning of contraction, inflation
3. Recession - GDP decreases, unemployment rate increases, aggregrate demand decreases, price decreases
4. Trough - End of contraction, unemployment, the trough cannot go lower because there are still people who demand goods. The economy begins to recover again after trough
Major points:
- GDP doesn't measure: the general progress in health and education, the condition of public infrastructure, fuel efficiency, community and leisure.
- Because it's averaged, the GDP mystifies and masks the gap between rich and poor.
- What's good for the GDP is not always good for the individual, take health care: rising costs may be tough on families, but it boosts the GDP
- Happy Planet Index (HPI), which looks at the degree of human happiness generated per quantity of environment consumed is a better indicator of well-being than GDP
- The GDP is often precisely wrong in that it's not measuring progress, just the making of stuff.
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