The Business Cycle

Quick revise

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