Module 14 Lesson 2

Phases of the Business Cycle

1) Prosperity

Prosperity is basically when the economy is booming. It was easy to get loans and the demand for things are high. Almost everyone had a job so the unemployment rate was low. With all the people working that made the income rate high. In the phase of the cycle the CPI, GDP, and GDP per capita are high. Producers expand businesses to take advantage. The consumers make more purchases.

2) Recession

Recession is when things kind of start to go downhill. The banks decrease credit. This makes it harder to receive loans. The CPI, GDP, and GDP per capita decreases. The producers then began to slow down and lay some workers off due to budget cuts. Trade then decreases. Consumers begin to buy basic low products.

3) Depression

After the Recession their is a Depression. This is when it is difficult to get a loan. The unemployment rate is increasing and consumers are spending even less. Less people are able to buy needs and wants. The trade is at a low start. CDI, GDP, and GDP per capita are at a low part.

4) Recovery

Then is when the economy is starting to heal. Consumer are begining to spend more. The unemployment rate is decreasing. That means more poeple are working. Business are hiring more and are starting to invest more and trade. CDI, GDP and GDP per capita are increasing. Banks are now starting to expand credit and making it easier to get loans.