Macroeconomics Phase 2



Macroeconomics Phase 2

Part 1: Economic Phases and Indicators

Expansionary Mode

Aggregate Demand increases as money supply level increases in the economy due to which Aggregate supply responds to the demand. The employment level increases in the economy as Aggregate supply increases as well the economic environment is conducive to initiate new businesses. Overall GDP (Gross Domestic Product) increases. Prosperity prevails as businesses are making profits and individuals are employed. Savings are reduced and spending increases (Sherman, 2010).

Recessionary Mode

Recession is decline in Gross Domestic Product for consecutive 2 quarters. Consumption is reduced and consumers start saving money due to economic ...