Understanding economic cycles can help us get ready for what might happen in the future. Economic cycles have four main stages: expansion, peak, contraction, and trough.
Expansion: During this time, the economy is growing. On average, the GDP (which measures how much a country produces) grows about 3% each year.
Peak: At this stage, unemployment drops to around 4%. This means many people have jobs, and the economy is doing really well.
Contraction: Here, the economy starts to slow down. The GDP might go down by 2% or more, and unemployment could rise to 10%. This can be tough for many people.
Trough: This is when the economy is at its lowest point. Often, governments will step in with programs to help things get better again.
By looking at past data, we can predict when downturns might happen. This helps us make smart choices, like saving money or investing. For example, knowing that contractions usually last about 11 months helps both people and businesses plan their finances better.
Understanding economic cycles can help us get ready for what might happen in the future. Economic cycles have four main stages: expansion, peak, contraction, and trough.
Expansion: During this time, the economy is growing. On average, the GDP (which measures how much a country produces) grows about 3% each year.
Peak: At this stage, unemployment drops to around 4%. This means many people have jobs, and the economy is doing really well.
Contraction: Here, the economy starts to slow down. The GDP might go down by 2% or more, and unemployment could rise to 10%. This can be tough for many people.
Trough: This is when the economy is at its lowest point. Often, governments will step in with programs to help things get better again.
By looking at past data, we can predict when downturns might happen. This helps us make smart choices, like saving money or investing. For example, knowing that contractions usually last about 11 months helps both people and businesses plan their finances better.