An economic cycle stage characterized by rising real GDP, income, and employment.
what is business cycle model?
- The business cycle model depicts the changes over time in a country's total output and employment. The model depicts the four long-term phases of an economy: expansion, peak, recession, and trough.
- An increase in company taxes will result in lower after-tax profits for companies, which will limit their ability to spend, hence lowering AD. The converse will occur if company taxes are reduced for AD. Generally speaking, if government spending rises, AD rises as well.
- Recession can enter a country's economy during the contraction phase. The phrase "contraction phase" refers to the time during a business cycle when real GDP is declining.
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