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Chapter 7: Q.16 (page 162)

Consider the diagram below. The line represents the economy's growth trend, and the curve represents the economy's actual course of business fluctuations. For each part below, provide the letter label from the portion of the curve that corresponds to the associated term.

a. Contraction

b. Peak

c. Trough

d. Expansion

Short Answer

Expert verified

a. Contraction- V

b. Peak- U

c. Trough- X

d. Expansion- S

Step by step solution

01

introduction

Economic growth is an expansion in the development of labour and products in an economy.

a. Contraction- V,

The curve slopes descending over the reach V, showing a decrease in the development pace of the economy. Subsequently, the economy encounters contraction over the reach V on the curve.

b. Peak- U,

The curve rises and arrives at its most extreme over the reach U, showing the most noteworthy development rate accomplished by the economy during the given timeframe. Consequently, the economy arrives at its peak over the reach of U on the curve.

02

explanation

c. Trough- X,

The curve falls and arrives at its base over the reach X, demonstrating the most reduced development rate accomplished by the economy during the given timeframe. Along these lines, the economy arrives at its trough over the reach X on the curve.

d. Expansion- S,

The curve slopes up over the reach S, demonstrating an ascent in the development pace of the economy. Along these lines, the economy encounters expansion over the reach S on the curve.

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