Civics & Economics; by Kristin Casey
The four phases of the business cycle are:
The following economic ratings are used to gauge changes in the economy:
During phase one, Prosperity/Peak, unemployment remains low, income is relatively high, consumers have confidence about the future. The following economic ratings are also high: CPI, GDP, and per capital GDP. There is a lot of credit available from the banks. Americans are spending money, and are employed at high rates. During a recession (contraction), phase two, things start a downturn. Consumers postpone making major purchases. Consumers only purchase needs, and don't purchase wants. Producers slow down production, and cut back their workforce causing unemployment to rise. Recessions normally last six months or longer, and generate a lot of stress and depression to consumers and those that lose their jobs.