Economics Principles For A Changing World
Economics Principles For A Changing World
4th Edition
ISBN: 9781464186660
Author: CHIANG, Eric P.
Publisher: Worth Publishers,
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Chapter 16, Problem 1QP
To determine

Explain the stages of business cycles in the economy.

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Explanation of Solution

The business cycle refers to the periods of progress and decline in an economy. There are mainly four stages in the business cycle. They are listed below:

  • Recession: In the recession stage of the business cycle, the economy starts to slow down.
  • Trough: Trough is another stage of the business cycle where the economy hits the bottom, usually in a recession.
  • Expansion: At the stage of expansion, the economy starts growing gain.
  • Peak: At the economic stage of peak, the economy is at the top of the cycle. This means a state of ‘irrational exuberance’.
Economics Concept Introduction

Business cycle: The term business cycle refers to the repeated ups and downs in the level of economic activity that extend for several years.

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