Question

1.Define economic growth.

2,List the phases of the business cycle.

3.In which phase of the business cycle is unemployment at its highest? Where in the business cycle is it the lowest?

4.In which phase of the business cycle is inflation a possible problem?

5.Give two definitions of recession.

6.A good that is produced but not sold is still counted in GDP using the expenditure approach to computing GDP. Do you agree or disagree with this statement? Explain your answer.

Answer 1

Ans.

1) Economic growth is rise in national  income or real GDP of a country in a year. According to professor Arthur Lewis economic growth is growth of output per head of population.

2) The different phases of business cycles are - Expansion (Boom) , Peak (Upper turning point) , Contraction ( Recession) , Trough ( Lower turning point) .

3) Unemployment will be highest during recession or depression period. That is during Contraction unemployment will be highest. However unemployment will be lowest during boom period, that is in expansion period because in this period there is increase in income and output.

4) During peak the inflation can be a possible problem . In this period inflation is high and business is at its maximum point.