Question

1. Describe the five phases of the business cycle.                                                    (10 marks)
2. If an economy is in the recession phase of the business cycle, what are the appropriate policies that the government should formulate to tackle this problem?             (7marks)

 

Answer 1

1:The phases include

Launch : A business starts.

Growth: here the business experience developments.

Shake out: here sales continue to increase but a slower rate

Maturity:here the sales begin to decrease slowly.

Decline : This is the stage of business failure.

2:

Expansionary fiscal policy.