Question

Help me please :)

1.. Which is a more accurate way to compare GDP over time? 2. What happens during the expansion phase of a business cycle? 3. What happens during the contraction phase of a business cycle? 4. List two synonyms for the contraction phase of a business cycle. 5. Why is unemployment an important tool in identifying which stage of the business cycle the economy is in? 6. What are the weaknesses of using the unemployment rate as a measure of macroeconomic labor efficiency? 7. What are the causes and effects of inflation? Which sort of people benefit from inflation? Which sort of people lose with inflation?

Answer 1

Answer to question no 1:

The best possible ways to measure GDP is :-

PURCHASING POWER PARITY - By determining what each item purchased in a country would cost if exported . These cost are added up to total goods and services produced with a country for the given year

Answer to question no 2 :-

EXPANSION PHASE :-

1) Phase when economy moves from trough to peak .

2) Gross Domestic Product expands until it reaches its peak.

3) Synonym - Economic recovery

4) Ex- When Federal Reserve lowers interest rates and buyback bonds in open market .

Answer to question no 3:-

CONTRACTION PHASE :-

1) When economy moves from peak to trough .

2) GDP declines for two consecutive quarters and recession occurs .

3) When interest rates are increased and consumer does not spend freely .

Answer to question no 4:-

1) Recession

2) Trough

Answer to question no 5:-

Expansion- Businesses tend to grow more and thus require more workers, thus the opportunities increase.

Contraction - The analysts predict that decease in revenue of business will create economic slump and thus business will start laying off workers or halt all hiring process.

Answer to question no 6:-

1) The businesses may refrain to lay off old employees .

2) There is a boom of opportunities in debt collection agencies when there is contraction phase .

Answer to question no 7:-

Causes of Inflation:-

1) Cut in interest rate

2) Higher wages

3) Increase in money supply

4) Devaluation

5) Increase in taxes

Effects of inflation :-

1) It reduces the value of money

2) Hurt savers and people of fixed income

3) Increase in value of real estate.

4) Cost of products rises .

Beneficiary of inflation :-

1) Big cartels

2) Borrowers

3) Early recipient of inflated money

Sufferer of inflation :-

1) Existing creditors

2) Fixed income recipient

3) Importers

PROSPERITY PEAK Skad Guouoh Lun XPANSION RECESSİON IEXPANSìcN| ROSPERITY PROSPeRITY RECOVERY f< Line o le DEPRESSION TRouoH