The peak of the business cycle occurs when?
It refers to the last month before Gross Domestic Product (GDP), measured by things like employment and housing starts, declines.
Describe two criteria used to assess a market's potential for a new product. Based on these criteria, what are the steps the managers of a global company will need to take in order to decide whether a foreign market is a viable
market in which to introduce a new product?
The peak of the business cycle refers to the point at which economic activity has reached its highest point before beginning to decline. It marks the end of an expansion phase and the transition to a contracting phase. To determine when the peak of the business cycle occurs, economists usually look at various indicators, such as Gross Domestic Product (GDP), employment rates, industrial production, and consumer spending.
One way to identify the peak of the business cycle is by examining GDP growth. When GDP growth reaches its highest level and starts to slow down, it indicates that the economy is reaching its peak. GDP is a measure of the total value of goods and services produced within a country over a specific period.
Another indicator commonly used is the index of Leading Economic Indicators (LEI). The LEI is a composite index that combines various economic indicators, such as stock market performance, building permits, and average weekly hours worked. A decline in the LEI after a period of growth suggests that the economy is approaching or has reached its peak.
Additionally, financial markets can provide clues about the peak of the business cycle. Stock markets often reach their highest levels before the economy starts to contract. Monitoring stock market indices and trends can give some insight into the timing of the business cycle peak.
It's important to note that determining the exact peak of the business cycle is challenging, as it can only be confirmed retrospectively. Economists rely on historical data and indicators to identify when the peak has occurred. Therefore, the declaration of a peak often comes after the fact, and it can take several months to confirm.