ECONOMICS
BUSINESS CYCLES
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
increase government spending to stimulate economic growth
|
|
|
increase investment in training programs to assist unemployed people to find work
|
|
|
both a & b
|
|
|
None of the above
|
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: -The downward slope of the business cycle is called economic contraction. A contraction is a period when economic output declines. During this phase, the economy is producing fewer goods and services than it did before.
Detailed explanation-3: -Economic contraction, also called recession, is often defined as two consecutive quarters of declining gross domestic product. During a contraction, business activity is slowing, unemployment is increasing, and the economy is struggling. A recession typically lasts about one year, but may be longer or shorter.
Detailed explanation-4: -The recession in the economy implies that the AD in the economy is low which causes the real GDP to decline as output falls in the economy with the decline in economic activities. The government will implement the expansionary fiscal policy wherein it will either increase the government expenditure or reduce the taxes.