Los 13.a

Question 1

What are the four business cycle phases

Answer 1

• Expansion
• Peak
• Contraction (or Recession)
• Trough

Question 2

What happens during an expansion phase?

Answer 2

• Real GDP increases; employment, consumer spending, and business investment grow; inflation starts to accelerate as expansion peaks.

Question 3

What happens during an peak phase?

Answer 3

The point where real GDP stops increasing and begins to decrease. The rates of increase in spending, investment, and employment slow but remain positive, while inflation accelerates.

Question 5

What happens during a trough?

Answer 5

economic growth becomes positive again and inflation is typically moderate, but employment growth might not start to increase until the expansion has taken hold convincingly.