CE 10-07

Refer to the business cycle shown below.

(a) Point A is in the _______________ phase of the business cycle. (1 mark)

(b) Apart from the change in the real grow domestic product (GDP) growth rate, give TWO general economic phenomena which occur in this phase. (2 marks)

(c) During this phase of the business cycle, the nominal wage rate of some workers was reduced. Explain whether their real wage rate must also have decreased. (3 marks)