Chapter 21, Problem 8P

To determine

The three measures of the economy that tend to move together during the business cycle and the way they move.

Concept Introduction:

Economic recession: This period is an early stage of depression. In this period, the economy is in declining stage where slowdown is seen in the stock market, household market and there is an increase in unemployment.

Business cycle: Over a period of time, any country would face fluctuations in its economic activities. These fluctuations or upswings and downswings are called business cycles. These upswings and downswings are called expansion and recession respectively. In expansion phase, the economy tends to grow in real terms whereas in recession the economy tends to contract.