Question

The Business Cycle Exerclse 1 14 Using the graph below, identity the different stages of the business cycdle. Assume that A, B, and C represent consecutive yearrs Time a. A time period when the economy is growing toward full employment is known as (Click to select) It is depicted in the graph as Clek to select) b. A time period characterized by full or near-full employment is known as (Click to select) It is depicted in the graph as (Click to select) (Click to select) t c. A time period with two consecutive quarters of declining output is known as (Cick to select) It is depicted in the graph as d. A time period when employment and real output are at their lowest levels is known as (Click to select) It is depicted in the graph as (Cick to select) 14 of 19 Next > < Prev

Answer 1

a)Expansion phase,movement from B to C.

b)Peak phase,depicted by A

c)Recession phase ,depicted by movement from A to B

d)Trough phase,depicted by B

Explanation--Business cycle is fluctuations experienced in the economy as a result of changes in the economic activity. a)This is the time of recovery .Real output level grows towards full capacity and employment level grows towards full level.Prices rise as there is increase in resource utilization.

b)Peak represents maximum economic activity.

c)Decline in real output for two consecutive quaters and there is increase in unemployment and price level falls.

d)Trough is the lowest point in the business cycle when employment and output is at the lowest level and it is the end of recession.