ECONOMICS
BUSINESS CYCLES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Notice that things are slowing down a bit
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Notice that things are getting busier
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Be hiring more staff
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Be buying new equipment
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Detailed explanation-1: -The downswing of the business cycle towards a trough is called an economic contraction. It is associated with: decrease in production/output • increase in unemployment • decrease in wages • decrease in consumer spending.
Detailed explanation-2: -Definition: Recession is a slowdown or a massive contraction in economic activities. A significant fall in spending generally leads to a recession.
Detailed explanation-3: -Contraction: A contraction spans the length of time from the peak to the trough. It’s the period when economic activity is on the way down. During a contraction, unemployment numbers typically spike, stocks enter a bear market, and GDP growth is below 2%, indicating that businesses have cut back their activities.
Detailed explanation-4: -Business Cycle Recession A recession refers to the period in a business cycle where there is a rapid decline in the national output, income, and employment. Business activity contracts during this phase.