The Business Cycle

Question 1

what are the 4 phases?

Answer 1

boom, recession, slump, recovery

Question 2

what are the main causes of change in the business cycle?

Answer 2

changes in level of business and consumer confidence
Changes in govt. policy and external env
Change in value of consumer spending

Question 3

What are the stages of the cycle?

Answer 3

Boom then recession then slump then recovery

Question 4

What is a boom?

Answer 4

GDP highest
Low unemployment
High CU
High prices

Question 5

What is a recession?

Answer 5

Rising unemployment
GDP falls
Falling CU

Question 6

What is a slump?

Answer 6

High unemployment
GDP lowest
Low CU
Lower prices

Question 7

What is recovery?

Answer 7

GDP rising
Unemployment falling
CU rising

Question 8

How is functional and strategic decision making influenced by the business cycle?

Answer 8

Recession - reduce production and redundancies

Question 9

What influences economic growth?

Answer 9

Educated workforce
Exploitation of natural resources
Increased investment in technology
Govt. policy

Question 10

How does economic growth impact functional and strategic decision making?

Answer 10

Increase in sales as more demand, this also means more profit.
Increase in employment and investment to meet demand.