The Business Cycle

M14L2MA by Morgan Nobles

Phase One: Peak

Unemployment is low and income is relatively high. Consumers have confidence in the market, and demand is high. There are high levels of trade and output, and there is a lot of credit and it is easy to get a loan.

Phase Two: Recession

Economic downturn, consumers downturn purchases. Consumers begin to buy lower prices items, and producers slow down the production, and cut the size of the work force. The banks decrease credit, so it's hard to get a loan.

Phase Three: Depression

If a recession spirals, it will become a depression. Unemployment is high, there are large decreases in consumer spending. CPI, GDP, and per capita GDP are at the lowest rates. Phase three can be skipped if the economy picks up.

Phase Four: Recovery

Consumer spending goes back up, unemployment begins to decrease, and businesses begin to invest and trade more.