Four Phases of the Business Cycle

Jalen Mills

Prosperity/ Peak

  • Its easy to get loans
  • The demands are high
  • The unemployment remains low
  • Income is high
  • The CPI, GDP, and per capita GDP are high
  • Producers expand business to take advantages of marketplace opportunities
  • The consumers lead to more purchases made

Recession/ Contraction

  • Banks decrease credit making it harder to get loans
  • CPI, GDP, and per capita GDP decreases
  • Producers slow down production and cut the size of their workforce and cut wages/salaries.
  • Trades decreases investment which causes plans to get cancelled
  • Consumers will begin to buy basic low products that satisfy needs not wants

Depression/ Trough

  • Not always a part
  • Its difficult to get a loan
  • Is an even further decrease in employment & consumer spending
  • Unemployment is extremely high
  • Producers will create less good and services
  • There are fewer people able to buy their goods and services
  • Trade is low
  • CDI, GDP, and per capita GDP are at their lowest points

Recovery/ Expansion

  • Consumers spending increases
  • People once again begin to buy good that satisfy wants as well as needs
  • Unemployment begins to decrease
  • Business begins to invest and trade more
  • CDI, GDP, and per capita begin to increase again
  • Banks expand credit
  • Loans become easier to get
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