The business cycle model illustrates macroeconomic fluctuations between expansion and contraction phases due to changing demands on firms.
The business cycle model represents the fluctuations in macroeconomic trends, depicting periods of expansion followed by contraction. For example, during the expansion phase, an increase in demand on firms leads to expanded production and income growth, while the contraction phase involves reduced output and incomes. This model helps economists understand the interplay of factors influencing the economy.
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