Phases of the Business Cycle

14 Lesson 2

Prosperity/ Peak

Low income is relatively high, which is why unemployment remains. The consumers have more confidence about the future state of the economy which leads to more purchases. The demand is high, CPI,GPD, and per capital GDP are high, the producers expand businesses to take advantages of marketplace opportunities. There are high levels output and trade, there is a lot of credit available to consumers, this means easy to get a loan.


It's when there's a economic downturn for the last 6 months, the consumers will postpone major purchases and they will began to pay basic low price products. They will try to satisfy their needs instead of their wants. So the producers slow down their size of work force and cut wages. Trade decreases and it makes getting a loan harder to get.

Depression/ Trough

Sometimes a recession can take a spiral into depression. A depression is a even further decrease in employment and consumer speeding. Producers will create less then good sells ads services because there are fewer people to buy their goods, at there lowest point. Banks decrease credit even further making it even harder to get a loan.

Recovery/ Expansion

It's the recovery stage were spending goes up, and the consumers want to satisfy their wants and their needs. Unemployment begins to decrease, because they need more workers to keep up with the spenders. Banks began to expand credit, and it becomes easier to get loans again.