ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -During economic expansion, GDP rises, per capita income grows, unemployment declines, and equity markets generally perform well. The peak phase represents the end of an expansionary period after which contraction takes hold.

Detailed explanation-2: -Proposed by economist Arthur Okun in 1962, it basically states that if GDP grows rapidly the unemployment rate declines, if growth is very low or neg-ative the unemployment rate rises, and if growth equals potential the unemploy-ment rate remains unchanged.

Detailed explanation-3: -In broad terms, an increase in real GDP is interpreted as a sign that the economy is doing well. When real GDP is growing strongly, employment is likely to be increasing as companies hire more workers for their factories and people have more money in their pockets.

Detailed explanation-4: -Expansion is a period of economic growth: GDP increases, unemployment declines, and prices rise. The peak marks the end of an expansion and the beginning of the next stage, the contraction. During the contraction, GDP decreases, unemployment rises, and prices remain steady or fall.