Question

What are the positives and negatives for people when the economy hits a trough?

Answer 1

The negatives of an economic trough include job loss and financial strain, while a potential positive is an improved trade balance. Companies may reduce wages and lay off workers, impacting employees and families. Tracking real GDP is essential for understanding these economic cycles.

Step-by-step explanation:

When the economy hits a trough, the main negatives for people include the risk of unemployment and the financial strain that results from job loss. This challenging period can lead to companies laying off workers or reducing wages, which inflicts financial and personal costs on employees and their families. However, there can be a positive aspect, such as the potential for an improved trade balance, either a higher trade surplus or a lower trade deficit, which might benefit the economy in certain situations.

Furthermore, during economic troughs, goods and services may become cheaper due to a decrease in demand, which could benefit consumers if they retain their income. Tracking real GDP over time is pivotal in understanding these cyclic events, as it allows for a clear view of economic performance and facilitates informed decision making by policymakers and investors.

Answer 2

A recession begins after a financial peak in the economy and ends when it reaches a trough or lowest point. (this is usually when people experience the hardest times) However, a trough indicates a turnaround point where the economy starts to recover. A lengthy or severe recession is often known as a depression.

Hope this helps! I found the answer while reading the American School study guide exam activity 28-1.