Unit 3 Assignment: Business Cycle

Description

Unit 3 Assignment: Business Cycle Study the charts below, then complete the following exercise. Figure 1   Figure 2 Exercise 1. Write a brief description, based on what you see in the charts above, of the following phases of the business cycle: Trough: Expansion: Peak: Recession: Exercise 2. Review the information on the business cycle, then complete the chart below describing conditions in the phase of the business cycle. For example, “Housing Construction.” What happens to housing construction during an expansion? Does it increase or decline? That’s what you need to describe. Note: these should be descriptions, not one word answers. Explanation of Four Phases of Business Cycle Prosperity Phase: When there is an expansion of output, income, employment, prices and profits, there is also a rise in the standard of living. This period is termed as ‘prosperity phase’. The features of prosperity are: High level of output and trade. High level of effective demand. High level of income and employment Rising Interest rates. Inflation Large expansion of bank credit. Overall business optimism. A high level of MEC (Marginal Efficiency of Capital) and investment. Due to full employment of resources, the level of production is maximum and there is a rise in GNP (Gross National Product).  Due to high level of economic activity, it causes a rise in prices and profits. There is an upswing and the economic activity and economy reaches its Peak.  This is also called a Boom Period. Phases of   Business Cycle INDICATOR  Trough Expansion  Peak Recession Interest Rate                                                                                                           Stock Price Consumer Confidence Business Profits Consumer Spending Industrial Production Housing Construction Business Investment Submitting your work: Click on the “Add Submission” button to upload a document. PDF is the preferred file format (choose ‘save as’ from the file menu and change the file format to PDF). Alternatively, you can use the text box on the submission page to recreate the worksheet. Click on the first button in the toolbar to access all the formatting tools. Please insure that any and all quotes used in your work are properly attributed to their original author through quotation marks and citations to avoid issues of plagiarism, which will have a negative impact on your grade.