Reference no: EM133378475

Question: KINDLY REPLY TO THIS CLASSMATE ON THE DISCUSSION THREAD WITH 100 WORDS.

There are four phases of the business cycle, these include expansion, peak, recession, and trough. Expansion is when the company experiences quick growth. Things look generally positive during this phase with employment levels rising, more products available, and better prices. Peak is when the economy hits its maximum rate, prices stabilize, and a company starts to look at its spending versus its profits to see if they need to make adjustments. A recession happens when the growth of the company stalls, employment declines, and the economy starts to take a dip because they can not sustain adequate sales for the amount of product they have. The trough is the bottom of the barrel when the company suffers the maximum amount from stagnant prices and spending, eventually recovering to trend back up. The housing market is a great example of this. When the market was good houses were going for cheap, and the demand was so high they were able to sell and make a profit. Eventually, the market hit a point where prices started to inflate and everyone got tired of being outbid by companies looking to rent the homes they purchase to make a profit, and they stopped buying homes. The homes began to take a dip again, which would be the trough, and people began buying here and there. Now, at least in my neighborhood, house prices are on the rise again. The housing market tends to follow the business cycle pretty regularly.