Question

Which phase of the business cycle would be the best time to purchase a large ticket item and why?

Answer 1

A large ticket (High priced) item should be ideally purchased during the Recession phase.

During recession, aggregate demand decreases, therefore firms accumulate unintended unsold inventory. To minimize losses, firms often sell their goods at a discount. Therefore purchasing higher-priced goods during recession leads to large cost savings. In the financial market, buying stocks during recession based on their intrinsic value as computed by its fundamentals would be beneficial because during expansion phase, the stock price will rise and the investor will gain by selling such stock.