2.5 economic growth

Question 1

what are the 5 characteristics of a boom?

Answer 1

. High animal spirits increase consumption and investment.
. High economic growth measured by an increase in real GDP.
. Demand pull inflation as the price level increases.
. Low unemployment as firms demand more workers.
. An improved budget as government spending decreases and tax revenue increases.

Question 2

what are the 5 characteristics of a bust / slowdown?

Answer 2

.Low animal spirits decrease consumption and investment.
.Low economic growth measured by a decrease in real GDP.
.Low inflation or deflation as the price level decreases.
.High unemployment as firms demand fewer workers.
.A worsened budget as government spending increases and tax revenue decreases.