What factors affect the phases of a business cycle?

The four stages of the cycle are expansion, peak, contraction, and trough. Factors such as GDP, interest rates, total employment, and consumer spending, can help determine the current stage of the economic cycle. Insight into economic cycles can be very useful for businesses and investors.

What four factors cause changes in the business cycle?

Variables affecting the business cycle include marketing, finances, competition and time.

What are 2 factors that affect the business cycle?

main factors contribute to changes in the business cycle: business decisions; interest rates; consumer expectations; and external issues. When businesses increase production, they increase aggregate supply and help fuel an expansion. When they decrease production, supply decreases and a contraction may result.

What are the causes and consequences of business cycle?

The business or trade cycle relates to the volatility of economic growth, and the different periods the economy goes through (e.g. boom and bust). There are many different factors that cause the economic cycle – such as interest rates, confidence, the credit cycle and the multiplier effect.

What causes a trough in the business cycle?

A trough in the business cycle occurs when a recession ends and economic recovery or expansion begins. … Its diffusion is measured by the extent of its spread across economic activities, industries, and geographical regions.

What factors affect the different phases of the business cycle quizlet?

There is an increase in various economic factors such as production, employment, output, wages, profits, demand and supply products, and sales. The prices of factor of production and output increases simultaneously. There is an increase in the flow of money.

What causes business cycles and what factors are the major contributors to long term economic growth?

Long-term growth is caused by increases in labor, capital, and productivity. Policy changes in the areas of education, taxation, competition, basic research, and infrastructure can influence the economy’s long-term growth rate, but only at the margins.

How do exogenous factors cause business cycle?

Exogenous causes are factors that influence the business cycle from outside of the system, e.g. climate (drought and other natural disasters) and the political situation of a country. Endogenous causes are factors that influence the business cycle from inside the system, e.g. total expenditure.

What are the 5 causes of the business cycle quizlet?

Terms in this set (5)
  • Capital Expenditures. When businesses are optimistic, they will buy more L,L,C,E. …
  • Inventory Adjustments. Businesses stock up when demand is anticipated. …
  • Innovation, then Imitation. One firm innovates, the other firms have to catch up (spend L,L,C,E). …
  • Monetary Factors. …
  • External Shocks.

What three factors affect business cycles quizlet?

Terms in this set (15)
  • Contraction.
  • Trough.
  • Expansion.
  • Peak.

What are the phases of a business cycle quizlet?

The four phases of the business cycle are peak, recession, trough, and expansion.

What are the five stages of the business cycle?

Whether you are a new business owner or have run your small business for years, it is wise to familiarize yourself with the five cycles of change: startup, growth, maturity, transition and succession.

What were the causes of the Great Depression of the 1930’s?

While the October 1929 stock market crash triggered the Great Depression, multiple factors turned it into a decade-long economic catastrophe. Overproduction, executive inaction, ill-timed tariffs, and an inexperienced Federal Reserve all contributed to the Great Depression.

What is the prosperity phase?

The business cycle describes the circular pattern of boom and bust that capitalist economies routinely undergo. … According to Investopedia, the prosperity phase, also sometimes called the expansion phase, occurs when the economy is quickly growing. This has several effects on the business climate.

What happens in each stage of the business cycle?

Throughout its life, a business cycle goes through four identifiable stages, known as phases: expansion, peak, contraction, and trough. … During an expansion, businesses and companies are steadily growing their production and profits, unemployment remains low, and the stock market is performing well.

What is the contraction phase of a business cycle?

Contraction, in economics, refers to a phase of the business cycle in which the economy as a whole is in decline. A contraction generally occurs after the business cycle peaks, but before it becomes a trough.

What is business cycle discuss its phases?

Business cycles are identified as having four distinct phases: peak, trough, contraction, and expansion. Business cycle fluctuations occur around a long-term growth trend and are usually measured by considering the growth rate of real gross domestic product.

What is business cycle expansion?

expansion, in economics, an upward trend in the business cycle, characterized by an increase in production and employment, which in turn causes an increase in the incomes and spending of households and businesses.

What causes a nation’s economic activity to fluctuate?

Every nation’s economy fluctuates between periods of expansion and contraction. These changes are caused by levels of employment, productivity, and the total demand for and supply of the nation’s goods and services. In the short-run, these changes lead to periods of expansion and recession.

What causes inflation?

Inflation is a measure of the rate of rising prices of goods and services in an economy. Inflation can occur when prices rise due to increases in production costs, such as raw materials and wages. A surge in demand for products and services can cause inflation as consumers are willing to pay more for the product.