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