The business cycle model represents a business cycle where is a decline in real gdp for 3 consecutive years or more, a significant rise in the unemployment rate and deflation
What is business cycle?
- A business cycle is a recurrent pattern of changes in the Gross Domestic Product (GDP) that revolves around the pace of long-term natural growth. It shows how an economy fluctuates between expansion and decline throughout time. Economic activity goes through expansionary and contractionary periods known as business cycles.
- These modifications affect both private institutions and the wellbeing of the general populace. According to the NBER, a recession is a time between the peak and the trough of the business cycle when there is a notable fall in economic activity that affects the entire economy and can last anywhere between a few months and more than a year.
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