ECONOMICS
BUSINESS CYCLES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Peak
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Contractionary
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Trough
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Growth
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Detailed explanation-1: -As people are earning higher wages, they spend more money in the economy – adding to demand. 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: -The four stages of the business cycle are expansion, peak, contraction, and trough.
Detailed explanation-3: -The option is true as stagflation is not a part of the business cycle.
Detailed explanation-4: -The trough is the lowest point in an economic contraction, when real GDP stops falling. When an economy is expanding or growing, many people have jobs and many goods and services are being produced and sold.