2.5.3: Trade (Business) Cycle Flashcards

1
Q

What is a trade (business cycle)?

A
  • Refers to the changes in real GDP that occur in economy over time
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2
Q

What are the 4 stages in a trade cycle?

A
  • Boom
  • Recession
  • Slump
  • Recovery
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3
Q

The characteristics of a recession

A

-Unemployment increases
- Inflation falls slightly (disinflation)
- Incomes drop
- Decreasing demand
- Decreasing confidence

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4
Q

The characteristics of a slump

A
  • Low unemployment
  • Low demand
  • Low investment
  • Low consumer confidence
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5
Q

The characteristics of a recovery

A
  • Increasing employment
  • Increasing demand
  • Increasing investment
  • Increasing confidence
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6
Q

The characteristics of a boom

A
  • High GDP
  • Increase in imports
  • Strong domestic currency
  • High confidence
    -High investment
    -High demand
  • High employment
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7
Q

What is an economic boom?

A
  • a period where there is high GDP and output in the economy
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8
Q

What is a recession?

A
  • a period of downturn in economic activity
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9
Q

What is a recovery?

A
  • when the economy is trying to get back to normal state after a slump/ recession
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10
Q

What is a slump?

A
  • a period of decline in economic activity
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11
Q

What can cause a recession?

A
  • A global financial crisis, e.g 2008, could cause a boom to turn into a recession
  • Agricultural harvest
    -Trading Partners, eg a recession in the EU would cause exports to fall from the UK, which could trigger a change from slowdown to recession
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12
Q
A
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