13 Business Cycle
Gross Domestic Product (GDP)
The market value of all final goods and services produced within a country in a year.
Economists conventionally use the concept of Gross Domestic Product to measure the size
of an economy.
Estimated by governments
The Business Cycle Diagram
Stages of the Business Cycle
Boom High levels of consumer spending, business confidence, profits and investment,
prices and costs also tend to rise faster. Unemployment tends to be low.
Recession Falling levels of consumer spending and confidence mean lower profits for the
business – which start to cut back on investment. Spare capacity increases + rising
unemployment.
Slump/depression Very weak consumer spending and business investment; many buses
failures; rapidly rising unemployment; prices may start falling.
Recovery things start to get better; consumers begin to increase spending; businesses
feel a little more condiment and start to invest again; but it takes time for the
unemployment to stop growing.
Gross Domestic Product (GDP)
The market value of all final goods and services produced within a country in a year.
Economists conventionally use the concept of Gross Domestic Product to measure the size
of an economy.
Estimated by governments
The Business Cycle Diagram
Stages of the Business Cycle
Boom High levels of consumer spending, business confidence, profits and investment,
prices and costs also tend to rise faster. Unemployment tends to be low.
Recession Falling levels of consumer spending and confidence mean lower profits for the
business – which start to cut back on investment. Spare capacity increases + rising
unemployment.
Slump/depression Very weak consumer spending and business investment; many buses
failures; rapidly rising unemployment; prices may start falling.
Recovery things start to get better; consumers begin to increase spending; businesses
feel a little more condiment and start to invest again; but it takes time for the
unemployment to stop growing.
