business cycle quiz Flashcards
(17 cards)
characteristics of expansion
wages increase, low unemployment, optimism, money being spent, high demand, stock prices increase
characteristics of a peak
the economy stops growing; GDP reaches maximum, businesses cant hire anymore
characteristics of contraction
businesses cut production and fire people, unemployment increases, banks stop lending money, number of jobs declines
characteristics of a trough
the economy bottoms out, stock prices drop, high unemployment and low spending
what are the variables that keep the business cycle going
business investments, low interest rates/credit, consumer expectations, and external shocks
how do business investments impact the business cycle
the economy expands and sales/profit rise, so companies invest in new equipment, which creates new jobs and allows expansion
how do low interest rates/credit impact the business cycle
low rates cause people to make new investments, which means jobs are added. high rates cause less investment, so there is less job growth
how do consumer expectations impact the business cycle
a forecast of an expanding economy causes more spending, while fears of recession lead to less spending
how do external shocks impact the business cycle
shocks are sudden changes of external supply. they influence the output of the economy
wages increase and decrease at what stages
expansion, contraction
wages are at their highest and lowest in which stages
peak, trough
borrowing increases and decreases at which stages
contraction and expansion
borrowing is the lowest at which stage
trough
business profits are the highest at which stage
peak
people should look for jobs at which stage
expansion
who is included in the labor force
civilians who arent institutionalized, 16+ year olds, those who have a job, and those who have been looking for a job in the last 4 weeks ( unemployed)
the business cycle is measured by what
GDP
