2.1. Explain the changes in the following economic variables with proper justification during Peaks of Business cycle in the diagram. A) Inflation B) Unemployment rate C) Employment level in the country D) Aggregate demand of the country E) Aggregate supply in the country
2.1. Explain the changes in the following economic variables with proper justification during Peaks of Business cycle in the diagram. A) Inflation B) Unemployment rate C) Employment level in the country D) Aggregate demand of the country E) Aggregate supply in the country
Chapter1: Making Economics Decisions
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Transcribed Image Text:2.1. Explain the changes in the following economic variables with proper justification during Peaks of Business cycle
in the diagram.
A) Inflation
B) Unemployment rate
C) Employment level in the country
D) Aggregate demand of the country
E) Aggregate supply in the country
Expert Solution
Step 1
During peak business cycles, there is higher GDP, increasing growth rate and lower level of unemployment.
a.
Inflation: during peaks of business cycle, inflation is higher.
b.
Unemployment rate: during peaks of business cycle as stated above, unemployment rate is lower.
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