CFA Level I · CFA Level I Exam · Understanding Business Cycles
An economy's real GDP growth has slowed for three consecutive quarters but remains positive, and inflation is rising while unemployment is at a cyclical low. Analysts most likely describe the economy as:
The economy is best described as in the late expansion, near the peak. Growth is still positive but slowing, unemployment is very low and inflation is rising. A trough or confirmed recession would involve weak or falling output and high unemployment.
- Ain the late expansion phase, approaching a peakCorrect
- Bat a trough, with recovery imminent
- Cin the early contraction phase, with a recession confirmed
Explanation
Positive but decelerating growth, low unemployment and rising inflation point to a mature expansion near the peak. A trough would show weak activity and high unemployment. A recession typically involves declining output, which has not occurred here.
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