2.5.1 Economic influences (BUSINESS CYCLE)

Question 1

what is GDP

Answer 1

gross domestic product - measures the output in an economy

Question 2

what happens in a boom

Answer 2

higher prices
higher wages
higher consumer spending

Question 3

what happens in a recession

Answer 3

low profits
redundancies
investments fall
businesses look for other markets

Question 4

what happens in a downturn

Answer 4

more redundancies
high unemployment
low consumer spending

Question 5

what happens in a recovery

Answer 5

increased production
wage rise
unemployment declines
increased consumer spending

Question 6

impacts of a boom/recovery on a business

Answer 6

increased demand
higher sales and profits
business confidence is high
more likely to invest
reduced unemployment
encourages new start ups

Question 7

impacts of a recession / slump on a business

Answer 7

decreased demand and production cuts

sales and profit declines

less likely to invest

may lay off employees
-increased in business closures