Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / An economy has historically grown at a rate of 1
An economy has historically grown at a rate of 1.25%. Economic activity decreased every quarter over the past year, but the decline stopped this quarter. The economy is expected to grow at a rate of 1.4% in the near future, and the monetary authorities are concerned that inflation may increase.
This economy is probably in the _____ stage of the business cycle.
a. expansion
b. recovery
c. contraction
d. trough
As we know that the Economic or Business Cycle has four phases which are as following
In the expansion phase, the economy rapidly grows, the employment is generated, interest rate is low and with a healthy inflation rate.
In the Peak phase, the economy is at its peak and then then to take a downward turn with interest rate tend to increase.
In the Recession Phase, the economy slows or contracts, people lose their jobs, interest rate starts increasing and and their is stagflation.
In the Trough Stage, the economy starts growing again after touching it lowest point.
Given in the question that the economy decreased every quarter over the past year but the decline stopped this year, this means the economy reached its lowest point and starts growing again.
Thus we can say that the economy is in trough stage of the business cycle.
Hence the correct answer is (d) Trough.
