Module14 Lesson2 Mastery Assignment
By: Julia Koff
Phase 1: Prosperity/Peak
- Consumers have confidence about future state of economy which leads to more purchases, therefore demand is high.
- Unemployment remains low, income is relatively high.
- Producers expand businesses to take advantage of marketplace economies, they invest.
- There are high levels of output and trade.
- CPI, GDP, and per capita GDP are high
- There is a lot of credit available to consumers so it's easy to get a loan
In this phase the economy would be very good. It would be easy to get a job because unemployment is low and it would be easy to afford things because income is high which in turn means you can buy more stuff, helping the economy out even more.
Phase 2: Recession/Contraction
- Economic downturn that lasts for 6+ months.
- Consumers postpone major purchases, only buying what they need instead of what they want, they are less confident.
- Producers slow down production output and trade decreases.
- Workforce size and wages get cut.
- Investment plans get cancelled.
- CPI, GDP, and per capita GDP decrease.
- Banks decrease credit making it harder to get a loan.
In this phase of the economy it would be harder to get by. It would be harder to find a job and you would only purchase things that you absolutely needed, and even then that could be difficult since loans would be harder to get. It would impact my life because I wouldn't have enough money to do fun stuff like go shopping.
Phase 3: Depression/Trough
- Recession that downward spirals into a depression.
- Decrease in employment and consumer spending.
- Unemployment is extremely high, income is low.
- Producers will create less goods, low output, because there are fewer people able to buy goods.
- Trade and investment are at a low.
- CPI, GDP, and per capita GDP are at their lowest points.
- Banks decrease credit further making it even more difficult to get a loan.
In this phase of the economy, living conditions would be very difficult. It would be very hard to get a job and pay the bills. Simply getting by would be a struggle. It would be hard to do anything except fulfill the most basic needs.
Phase 4: Recovery/Expansion
- Consumer spending and confidence increases, buying needs and wants.
- Unemployment decreases because business seek additional workers to create more goods and services (output increases) once spending increases.
- Businesses invest and trade more.
- CPI, GDP, and per capita GDP begin to increase again.
- Banks begin to expand credit, making it easier to get a loan.
In this phase of the economy, individuals would start to feel relief because they can start to get jobs and make money. They can enjoy spending without worrying where the money is coming from because they will have jobs and there will be plenty of goods and services.