(a) What is happening to GDP / Output at each of the following phases of business cycle? Briefly explain why? Phases Explanation Recession   Depression   Expansion and Recovery   Peak     (b) What is happening to unemployment at each of the following phases of business cycle? Briefly explain why? Phases Explanation Recession   Depression   Expansion and Recovery   Peak

(a). Recession - It refers to that phase of business cycle during which output is falling.

    Depression - It refers to that stage of business cycle which is of deep recession and at this stage output is minimum.

Expansion - It refers to that phase in which output is increasing.

Recovery - It refers to that stage of business cycle when GDP begins to increase.

Peak - It refers to that stage of business cycle when output has stopped increasing and it is at its maximum. After that output starts decreasing.

(b). Recession - During this stage of business cycle unemployment is increasing.

   Depression - It is the bottom of recession stage at which unemployment is at its highest.

Expansion - At this stage of business cycle, unemployment is decresing.

Recovery - At this stage of business cycle, unemployment started decresing and output increases.

Peak - It refers to that stage of business cycle at which unemployment is low.