Business Cycle Flashcards
1
Q
Peak
Everyone is having a good time
A
Inflationary pressure is high.
Consumption and investment are increased (AD increase) and rising nominal wages/ increased demand for imported raw materials (AS decreases).
2
Q
Upswing
Better days
A
Inflationary presses are increasing as the economy comes into a period of growth.
Business and Consumer confidence increases.
3
Q
Trough
Tough times
A
Less inflationary pressure as AD is falling.
Wages are low and cots of resources are falling so AS increases.
