Author Question: What are the four phases of the classical business cycle and how is employment typically affected ... (Read 709 times)

melina_rosy · **on:** Jun 30, 2018

What are the four phases of the classical business cycle and how is employment typically affected during each phase?

Question 2

In the nineteenth century, U.S. farmers were ordinarily debtors. Farmers typically borrowed from banks to develop new acreage and to be able to purchase necessary inputs prior to each growing season. Why did farmers generally support public policies that were inflationary?

Kjones0604 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

The four phases of the business cycle are:

expansion--employment is typically increasing/unemployment falling

peak--output is the highest during the cycle, employment typically increases to this point (before it begins to fall)

contraction--employment falls and unemployment rises (as output falls)

trough--output reaches its lowest level during the cycle, employment is typically falling until the trough is reached (after which it begins to rise)

Answer to Question 2

In times of unanticipated inflation, farmers were able to repay their loans with less valuable dollars. The rising price of crops would mean that farmers needed to produce slightly less crops in order to repay their loans.