The Business Cycle

There are four stages in an economic recovery. 1. increased production 2. rising demand (occurs twice) 3. increased hiring In which order do these stages occur?

2, 1, 3, 2

These are the four stages of the business cycle. 1. depression 2. prosperity 3. recession 4. recovery In which order do these stages occur?

2, 3, 1, 4

Which best describes how governments respond to changes in the business cycle?

Governments change their policies.

Which of the following conditions is most indicative of recovery?

The economy is growing again.

Which best describes how a recession develops as demand and production decrease?

The recession feeds on itself.

When production is very high but demand is very low, it can lead to

a recession.

During a recession, what is one way governments try to encourage growth?

by increasing unemployment benefits

Which of the following is a characteristic of the prosperity phase of the business cycle?

high levels of production

Income reaches the highest level at the ___ point of the business cycle.

peak

Which indicators do economists use to determine the state of the economy? Check all that apply.

prices employment levels gross domestic product (GDP)