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
2
Q
What are the 4 stages in a trade cycle?
A
- Boom
- Recession
- Slump
- Recovery
3
Q
The characteristics of a recession
A
-Unemployment increases
- Inflation falls slightly (disinflation)
- Incomes drop
- Decreasing demand
- Decreasing confidence
4
Q
The characteristics of a slump
A
- Low unemployment
- Low demand
- Low investment
- Low consumer confidence
5
Q
The characteristics of a recovery
A
- Increasing employment
- Increasing demand
- Increasing investment
- Increasing confidence
6
Q
The characteristics of a boom
A
- High GDP
- Increase in imports
- Strong domestic currency
- High confidence
-High investment
-High demand - High employment
7
Q
What is an economic boom?
A
- a period where there is high GDP and output in the economy
8
Q
What is a recession?
A
- a period of downturn in economic activity
9
Q
What is a recovery?
A
- when the economy is trying to get back to normal state after a slump/ recession
10
Q
What is a slump?
A
- a period of decline in economic activity
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
12
Q
A