Why does the business cycle diagram in the text look like the diagram - ProProfs Discuss
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Why does the business cycle diagram in the text look like the diagram is missing labels or look like some of the events are out of order?

Asked by Lewis, Last updated: Sep 14, 2021

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John Smith

John Smith

John Smith
John Smith

Answered Sep 08, 2016

Not all parts of the figure are labeled because the figure would become too crowded. Each label points to a specific shape of the figure. Various parts of the line have been labeled to identify specific events but the order of events is certainly not implied by the words.

The line itself implies the order of events. Having labeled what expansion looks like, what a peak looks like, what a trough looks like, what a contraction looks like, the following is fairly evident: The line rising and dipping from left to right shows an expansion, peak, contraction, trough, recovery, a second expansion and peak and contraction and trough and recovery, and then a third expansion and peak and contraction.

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