[AUD] Business cycles, Economic indicators
Business cycles
Expansionary Phase
- rising profits, strong growth, increase demand, rising price
- lower unemployment
Peak
- high point of economic activity
- input shortage lead to higher costs and higer price level
Contractionary Phase
- higher unemployment
Trough
- profits at lowest elvel
- firms have excess capacity, reduce cost and their workforces
Recovery Phase
- recovering economc activity
- rising demad, profit stabilization
- increase in employment
* Recession
: increase allowance for doubful accounts
Economic indicators
Leading indicator
Before economy activity starts, prediction
- Average weekly undemployment insurance intial claims
- Budiling permits for new private residences
- New manufacturer orders for consumer goods and materials
- Producer Price Index
Coincident indicator
- Manufacturing and trade sales
- industrial production(GDP)
Lagging indicator
result of economic activity
- Average prime rate charged by banks
- Average duration of unemployment
- Consumer price index(CPI) for service