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Author Question: What is a business cycle? What are its phases and turning points? What will be an ideal ... (Read 248 times)

james0929

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on: Jun 29, 2018
What is a business cycle? What are its phases and turning points?
 
  What will be an ideal response?

Question 2

Suppose the quantity of money is 1,000, the velocity of circulation is 6, and real GDP is 4,000. Then the price level is
 
  A) 2.0. B) 2.5. C) 1.1. D) 1.5. E) 6.0.


morganmarie791

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Reply #1 on: Jun 29, 2018
Answer to Question 1

A business cycle is the periodic but irregular up-and-down movement in production and jobs. It has two phases and two turning points. As the economy slows and the growth in real GDP turns negative, the economy enters the recession phase of the business cycle. At the bottom of the recession phase is one turning point, the trough. As the economy moves through the trough, it enters the expansion part of the business cycle during which real GDP grows. Finally, as the economy reaches its high point and swings from an expansion to a recession, the economy passes through the other turning point, the peak.

Answer to Question 2

D


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