The Business Cycle

Question 1

What are the 4 parts of the business cycle

Answer 1

1. Boom
2. Recession
3. Boom
4. Depression

Question 2

What are the features of a Contraction (Recession)

Answer 2

1. People spend less
2. Wages decrease
3. Employment levels fall (Unemployment levels rise)
4. Inflation rate stays low

Question 3

What are the features of Expansion (Boom)

Answer 3

1. People spend more
2. Higher wages (people can demand more money as there are lots of jobs)
3. Most people have a job
4. Inflation rises quickly
5. Interest rates are high