Draw an appropriate diagram to represent the business cycle and label each of the five phases. Provide a brief description of each phase
The five phases of the business cycle are: peak, contraction, trough, recovery and expansion. At the peak of a business cycle Real GDP is at a temporary high. In the contraction phase Real GDP is declining. A trough represents the low point in Real GDP, just before it begins to turn up. The recovery phase is the period when GDP is rising, up until it reaches the initial peak. The expansion phase represents an increase in GDP, beyond the initial peak and until the next peak.
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Suppose the actual budget deficit increases when the economy falls into a recession. This is an indication that
A) monetary policy was used during the recession. B) monetary policy was not used during the recession. C) fiscal policy was used during the recession. D) fiscal policy was not used during the recession.
Economists classify energy and water as part of which factor of production?
A) land B) labor C) capital D) entrepreneurship E) land if undeveloped and capital if developed
The new European Central Bank is located in which country?
A) England B) Italy C) France D) Spain E) Germany
If the price of margarine falls, the demand for butter will
A) remain unchanged. B) increase. C) decrease. D) rise at first and then fall.