Answer in a Q and A format (min 75 words).

timer Asked: Oct 20th, 2018
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Question Description

Answer Each of the following questions in Q&A format (minimum 75 words).

1. What are primary phases of the business cycle? 2. How does inflation affect the economy's level of real output? 3. How do changes in income affect consumption (and saving)? 4.What are factors other than income that can affect consumption? 5. What is aggregate demand (AD) and why is its downward slope the result of the real-balances effect, the interest-rate effect, and the foreign purchases effect? 6. What is aggregate supply (AS) and why does it differ in the immediate short-run, the short-run, and the long-run? 7.How do you apply the "extended" (short-run/long-run) aggregate demand (AD)-aggregate supply (AS) model to inflation, recessions, and economic growth? 8. What is the relationship between short-run aggregate supply and long-run aggregate supply?

Tutor Answer

School: UIUC


Running Head: Business Economics


Business Economics
Institutional Affiliation

Business Economics


Question 1
There are four phases in the business cycle which include the expansion phase, the peak phase, the
contraction phase, and the trough phase.
Question 2
Inflation is regarded as the increase in the general prices of goods and service. During the period
of inflation, consumers will tend to purchase too much thus creating high demand which leads to
disequilibrium in the balance of payments. The export will be less than the ...

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