Also known as the trade cycle. Most economies over time will see an trend of upward progression
Does not grow smoothly – fluctuate going through ups and downs know as the Business Cycle
Boom
- Boom – (peak) Fast economic growth
- Consumer spending and investment high
- Business will have high demand for goods/services
- Increasing incomes (increasing competition for workers)
- Profits high (high demand for resources = prices rise can lead to inflation)
- Wages rising
- High output due to high demand
- Steady economic growth
- Business and consumer confidence high
Recession
- Recession – (downturn/economic slow down)
- Incomes start to fall
- Output starts to fall
- Possible fall in demand for products
- Decline in profit
- Lay off workers – unemployment
- Consumer (save) and business confidence is low
- Reduced investment
Slump
- Slump – (depression)
- High unemployment
- Consumer confidence low
- Investment low
- Profits low
- Closures
- Any growth will be slow
Recovery
- Recovery (expansion/ upswing)
- Income starts to rise
- Output increases
- Spending and consumer confidence increases
- More employment as a result
