ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In the graph above, the curve above the trend line represents the expansion phase of the business cycle. The periods of expansion (economic growth where real output increases) follow a period of recessions. The booms characterize fast economic growth, which tends to be inflationary and unsustainable.

Detailed explanation-2: -In the expansionary phase, the economy experiences growth over two or more consecutive quarters. Interest rates are typically lower, employment rates rise, and consumer confidence strengthens. The peak phase occurs when the economy reaches its maximum productive output, signaling the end of the expansion.

Detailed explanation-3: -A trendline is a line drawn over pivot highs or under pivot lows to show the prevailing direction of price. Trendlines are a visual representation of support and resistance in any time frame. They show direction and speed of price, and also describe patterns during periods of price contraction.

Detailed explanation-4: -A peak is the highest point of a business cycle and is followed by a contraction and eventual trough.

Detailed explanation-5: -A peak occurs when expansion reaches its climax. With a large sum of demand for goods, inflation occurs where costs begin to increase. Gradually, consumers begin to buy less and macroeconomic indicators cease to increase. After reaching the peak, economic growth begins to decline and contract.