Four Factors and Four Phases Flashcards

1
Q

Four Phases?

A

Expansion, Peak, Contraction, Trough

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2
Q

Expansion?

A
  • R-GDP rises
  • New Jobs
  • More Spending
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3
Q

Peak?

A
  • R-GDP stops rising
  • New Businesses created; more jobs
  • More spending leads to higher prices
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4
Q

Contraction?

A
  • R-GDP starts decreasing
  • No new jobs, lowers income
  • Consumer spending decreases
  • Layoffs, recessions may occur
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5
Q

Trough?

A
  • R-GDP stops decreasing
  • Lowest point of the business cycle, layoffs stop
  • Unemployment, prices go down
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6
Q

Four Main Forces?

A

Business Investments, Government Activity, External Factors, Psychological Factors

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7
Q

Business Investments?

A
  • Capital investments creates more jobs, more consumer income
  • When businesses stop investing contraction may occur
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8
Q

Government Activity

A
  • Taxes and spending affect economy
  • Growth of money supply affect economy
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9
Q

External Factors?

A
  • New inventions, discoveries, war, natural disasters, and terrorism affect economy
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10
Q

Psychological Factors?

A
  • How people react to events affect the economy
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