In: Economics
What is meant by the "business cycle"? What are the four stages of this cycle? What is the Trend? Show a diagram.
Based on the stages of a business cycle, what is meant by "pro-cyclical"? What is meant by "counter-cyclical"?
Suppose that a business cycle trend line begins with real GDP at $5255 and ends with real GDP at $7357 over 4 years. What is the average annual real rate of growth? Show your calculations.
Suppose that a business cycle trend line begins with real GDP at $4500 and ends with real GDP at $5400 over 10 years. What is the average annual real rate of growth? Show your calculations.
Suppose that a business cycle trend line begins with real GDP at $6650 and ends with real GDP at $9400 over 5 years. What is the average annual real rate of growth? Show your calculations.
Discuss Leading, Lagging, and Coincident indicators.
Business cycle shows economic fluctuations in production, trade and general economic activities. It has 4 stages trough, peak, expansion and contraction which are explained below:
Trough : The lowest turning point of business cycle is known as trough.
Peak : The highest quantity reached at a point of time is known as peak.
Expansion : A period of economic growth is known as expansion.
Contraction : A period of negative growth is called contraction.
Currently, we are on the phase of expansion where there is growth in the economic output during years.