Quick Answer: What Is The Business Cycle Quizlet?

What generally causes the business cycle?

The business cycle is caused by the forces of supply and demand—the movement of the gross domestic product GDP—the availability of capital, and expectations about the future.

This cycle is generally separated into four distinct segments, expansion, peak, contraction, and trough..

What are the 5 causes of the business cycle?

Causes of the business cycleInterest rates. Changes in the interest rate affect consumer spending and economic growth. … Changes in house prices. … Consumer and business confidence. … Multiplier effect. … Accelerator effect. … Lending/finance cycle. … Inventory cycle. … Real business cycle theories.

How long is a business cycle?

The time from one economic peak to the next, or one recessive trough to the next, is considered a business cycle. From the year 1945 to the year 2009, the NBER defined eleven cycles, with the average cycle lasting a bit over 5-1/2 years.

How business cycle affect our economy?

The business cycle is crucial for businesses of all kinds because it directly affects demand for their products. … Boom: high levels of consumer spending, business confidence, profits and investment. Prices and costs also tend to rise faster. Unemployment tends to be low as growth in the economy creates new jobs.

Which phase of the business cycle follows a recession?

72 Cards in this SetWhat illustrates recurring growth and decline in real GDP?Business cyclesThe phase of the business cycle that follows a recession is known as the….TroughAs a general rule, a recession is a decline in real GDP lasting at least…Six Months69 more rows

What happens during a recession?

A recession is a period of economic contraction, where businesses see less demand and begin to lose money. To cut costs and stem losses, companies begin laying off workers, generating higher levels of unemployment.

What are the four parts of the business cycle quizlet?

-Growth, peak, recession, and trough.

What are the 4 stages of the business cycle?

The four stages of the economic cycle are also referred to as the business cycle. These four stages are expansion, peak, contraction, and trough. During the expansion phase, the economy experiences relatively rapid growth, interest rates tend to be low, production increases, and inflationary pressures build.

What 4 factors affect the business cycle?

Variables affecting the business cycle include marketing, finances, competition and time.Finances. Sales growth is usually slow during the introductory stage of the business cycle because the consumer market needs time to learn about and consider buying the product. … Marketing. … Competition. … Time.

What is business cycle and its phases?

Stages of a business cycle All business cycles are bookended by a sustained period of economic growth, followed by a sustained period of economic decline. Throughout its life, a business cycle goes through four identifiable stages, known as phases: expansion, peak, contraction, and trough.

How can a business cycle be controlled?

Following instruments are used to attain the objectives of economic stabilization, particularly for the control of trade cycles, relative price stability and attainment of economic growth:Monetary policy,Fiscal policy,Anti-cyclical budgeting, and.Automatic stabilizer (or) Built-in stabilizer.

How does government affect the business cycle?

Variations in the nation’s monetary policies, independent of changes induced by political pressures, are an important influence in business cycles as well. Use of fiscal policy—increased government spending and/or tax cuts—is the most common way of boosting aggregate demand, causing an economic expansion.

At which part of the business cycle is unemployment a major concern?

Unemployment increases during business cycle recessions and decreases during business cycle expansions (recoveries). Inflation decreases during recessions and increases during expansions (recoveries). … With unemployment, less will be produced (point “D”).

What is the meaning of business cycle?

What Is a Business Cycle? “Business cycles are a type of fluctuation found in the aggregate economic activity of nations… a cycle consists of expansions occurring at about the same time in many economic activities, followed by similarly general recessions…

What is an example of business cycle?

The Business Cycle. This is an example of a typical business cycle showing expansion, recession, then recovery. The growth trend is the average growth rate over time. A private think tank, the National Bureau of Economic Research, is the official tracker of business cycles for the U.S. economy.

What is business cycle diagram?

Business cycles are characterized by boom in one period and collapse in the subsequent period in the economic activities of a country. … These fluctuations in the economic activities are termed as phases of business cycles. The fluctuations are compared with ebb and flow.