Four Factors and Four Phases Flashcards
1
Q
Four Phases?
A
Expansion, Peak, Contraction, Trough
2
Q
Expansion?
A
- R-GDP rises
- New Jobs
- More Spending
3
Q
Peak?
A
- R-GDP stops rising
- New Businesses created; more jobs
- More spending leads to higher prices
4
Q
Contraction?
A
- R-GDP starts decreasing
- No new jobs, lowers income
- Consumer spending decreases
- Layoffs, recessions may occur
5
Q
Trough?
A
- R-GDP stops decreasing
- Lowest point of the business cycle, layoffs stop
- Unemployment, prices go down
6
Q
Four Main Forces?
A
Business Investments, Government Activity, External Factors, Psychological Factors
7
Q
Business Investments?
A
- Capital investments creates more jobs, more consumer income
- When businesses stop investing contraction may occur
8
Q
Government Activity
A
- Taxes and spending affect economy
- Growth of money supply affect economy
9
Q
External Factors?
A
- New inventions, discoveries, war, natural disasters, and terrorism affect economy
10
Q
Psychological Factors?
A
- How people react to events affect the economy
