BUSINESS CYCLE

take a look the following diagram with the following labels:

1 - Peak, 2 - trough, 3 - decline, 4 - growth

press YES if you already read and remember the labels.

• YES

• NO

Read each of the following question and place the proper letter next them that correspond with the business cycle.

The price of bread has increased 5% over the past three months

• P

• C

• T

• G

Interest rates at a low of 2% cause consumers to take out loans and buy homes.

• P

• C

• T

• G

The sale of durable goods is down for the 5^th consecutive month.

• P

• C

• T

• G

Due to factory closures unemployment has risen to a five year high of 10%

• P

• C

• T

• G

Due to increased consumer spending, the Federal Reserve raises interest rates to slow the economy down.

• P

• C

• T

• G

The DOW Jones industrial average reaches an all-time high.

• P

• C

• T

• G

GDP declines for four consecutive months, causing the Federal Reserve to lower interest rates.

• P

• C

• T

• G

The unemployment rate is at 3.4%, a new 15 year low.

• P

• C

• T

• G

How can predicting / understanding the business cycle influence your future financial decision?