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It is affected by certain macroeconomical variables such as inflation, recession, and unemployment.
The economy is affected as a whole by the business cycle, but different segments are affected in different ways. They are also affected to different degrees. Firms and industries that produce capital goods and consumer durables are more so affected by the business cycle than any others. Inflation is a general increase in the price of good and services. When times get tough, firms can postpone purchasing new capital goods and beginning new plant construction until there is more disposable income...
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