Unit 5 | Regulations - Business Cycle


BOOM: A period of fast economic growth. Output is high due to increased demand, unemployment is low. Business confidence may be high leading to increased investment. Consumer confidence may lead to extra spending.

SLUMP: A period when output slows down due to a reduction in demand. Confidence may begin to suffer.

RECESSION: A period where economic growth slows down and the level of output may actually decrease. Unemployment is likely to increase. Firms may lose confidence and reduce investment. Individuals may save rather than spend.

RECOVERY: A period when the economy moves between recession and a boom.

WHAT HAPPENS IN A BOOM?

  • Businesses produce more goods
  • Businesses invest in more machinery
  • Consumers spend more money. There is a
  • Less money is spent by the Government on unemployment benefits
  • More money is collected by the Government in income tax and VAT
  • Prices tend to increase due to extra demand

WHAT HAPPENS IN A RECESSION?
  • Businesses cut back on production
  • Some businesses may go bankrupt
  • Consumers spend less money.
  • Individuals may lose their jobs
  • More money is spent by the Government on unemployment benefits
  • Less money is collected by the Government in income tax and VAT
  • Prices start to fall


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2 Responses to “Unit 5 | Regulations - Business Cycle”

  1. Anonymous says:

    "What happens in a boom?" third point is incomplete.

  2. Anonymous says:

    The phrase probably finishes with 'there is a larger consumer spending due to icreased wages' or something like that but in any case the fact that consumers spend more is already relatable itself to a boom in an economy

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