Q. With reference to the phases of the business cycle, consider the following statements:
1.The peak stage is marked by the highest level of economic growth and maximum employment before the economy starts to contract.
2.During a recession, key economic indicators such as GDP, corporate profits, and employment tend to rise steadily.
Which of the statements given above is/are correct?
Answer: A
Notes:
Explanation:
- The peak stage is when all economic indicators (GDP, employment, prices, etc.) are at their maximum levels. After this, the economy usually enters a contraction or recession phase.
- In a recession, economic indicators like GDP, profits, and employment fall, not rise. There is a general slowdown or contraction in economic activity.
