1. business and consumer confidence, this is because

Topics: EconomicsInvestment

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Last updated: September 21, 2019

1.      BusinessCycle.·        “The term “business cycle” (or economic cycle orboom-bust cycle) refers to economy-wide fluctuations in production, trade, andgeneral economic activity. From a conceptual perspective, the business cycle isthe upward and downward movements of levels of GDP (gross domestic product) andrefers to the period of expansions and contractions in the level of economicactivities (business fluctuations) around a long-term growth trend.

(1)”·        The business cycle describes overalltrends in GDP. It shows how economies can swing from high economic growth to anegative growth. Business cycles have four phases; Expansion is characterized by economic growth that is caused frombusiness and consumer confidence, this is because when consumers are confidentthey purchase immediately instead of later because they know they will havefuture income to make further purchases as a result spending increases forboth, businesses and consumers where employment is also increasing. Investmentis also high, and property and stock market prices begin to rise. Peak is realized when an economy isproducing and its maximum allowed output, this is where demand is exceedingsupply and the economy begins to overheat and over expand only going downward.2.      Duringa contraction GDP growth rates beginto slow down.

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This is usually triggered by some sort of an event such as afinancial crisis where fear and panic replace the previous consumer confidence.Aggregate demand begins to fall as the spending and so do business profit. Consumerslose jobs and unemployment begins to rise, furthermore prices and investments aregoing down. Trough is the lowest pointin a declining growth rate where growth begins to cope, confidence must berestored for an economy to re-enter an expansion and this usually requiresintervention from the government with a monetary or fiscal policy1.

      BusinessCycle.·        “The term “business cycle” (or economic cycle orboom-bust cycle) refers to economy-wide fluctuations in production, trade, andgeneral economic activity. From a conceptual perspective, the business cycle isthe upward and downward movements of levels of GDP (gross domestic product) andrefers to the period of expansions and contractions in the level of economicactivities (business fluctuations) around a long-term growth trend. (1)”·        The business cycle describes overalltrends in GDP.

It shows how economies can swing from high economic growth to anegative growth. Business cycles have four phases; Expansion is characterized by economic growth that is caused frombusiness and consumer confidence, this is because when consumers are confidentthey purchase immediately instead of later because they know they will havefuture income to make further purchases as a result spending increases forboth, businesses and consumers where employment is also increasing. Investmentis also high, and property and stock market prices begin to rise. Peak is realized when an economy isproducing and its maximum allowed output, this is where demand is exceedingsupply and the economy begins to overheat and over expand only going downward.2.      Duringa contraction GDP growth rates beginto slow down.

This is usually triggered by some sort of an event such as afinancial crisis where fear and panic replace the previous consumer confidence.Aggregate demand begins to fall as the spending and so do business profit. Consumerslose jobs and unemployment begins to rise, furthermore prices and investments aregoing down. Trough is the lowest pointin a declining growth rate where growth begins to cope, confidence must berestored for an economy to re-enter an expansion and this usually requiresintervention from the government with a monetary or fiscal policy

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