Exercise 6: Economic Fluctuations: The business cycle

Part I: Business Cycle

Direction: Complete the illustration below by identifying the different phases of the
business cycle. Thereafter discuss each phase below your illustration.

The illustration above shows the cycle of a business. In 2001 it is the mark
where the business cycle started. It rose from its highest deficit. 2003 was marked as
the recession period where the business experienced a slowdown of the cycle.
However in the middle of 2003 and 2004 the business experienced a recovery and in
2004 the business reached its peak. The summit of its business cycle. Afterwards in
2005, the business experienced a trough where the business experienced decline
again.

Part II: Essay

1. How does investment affect the business cycle in the country?

It affects the country greatly, for investment is the major source of capital of the
country.

2. What are the costs of a business cycle? Relate it to the Philippine setting. How it
affects the economy of the country and what are the possible consequences.
Explain.

The business cycle affects a lot especially all the people in the business. Just like
in the Philippines if our economy declines many Filipino workers will be affected.
Some will lost their jobs and some will have a decrease of wage. On the other
hand, if the economy of the Philippines is at its peak, many Filipino workers will
prosper.