Question

Business cycles consists of four phases: expansion, recession, contraction, and recovery. True or false?

Answer 1

Answer: false

         

Explanation: The four phases of business cycle are as follows :-

1. Expansion

It's the initial step. There's an increase in jobs, profits, output, and revenues whenever the expansion happens. Usually individuals pay on time for their loans. 

2. Peak

The second phase is a peak once, having exceeded the maximum rate of growth, the economic situation hits a nab. Prices have reached their maximum level, and leading indicators have stopped growing.

3. Recession

These would be stagnation phases. Throughout a recession, joblessness is rising, the output is slowing down, revenues are beginning to fall due to a fall in demand, and earnings are stagnating or declining.

4. Depression

Although unemployment is rising and productivity is plummeting, economic development keeps falling.

5. Trough

This period marks the end of the depression, leading an economy into the next step.

6. Recovery

The economy is beginning to turn still at this point. Cheap prices are contributing to such an increase in demand, jobs and development, and borrowers are beginning to expand their lending coffers. This phase signals the end of a period of the business cycle.