BS3- The Business Cycle Flashcards
Explain what is meant by the business cycle.
The rise and falls economic activity: these follow a pattern that can be identified as boom, recession, slump and recovery
Draw and label the business cycle
Boom, recession, slump, recovery
Describe two stages of the recovery stage
Consumers start spending again
Demand increases
Describe two characteristics of the boom stage
High level of employment
High demand for products
Describe two characteristics of the recession stage
Two successive quarterly falls in GDP
Sales fall
Describe two characteristics of the slump stage
Leads to high levels of unemployment
Low business confidence
Describe one way that the MPC could support the recovery of the economy
Monetary policy committee: they meet once a month to discuss whether to change the rate of interest
Identify two reasons why company’s do not invest during a slump
There are low profits which makes it risky if they plan to get the money back fast
They may find it a lot harder to gain investments
Identify two ways a business could use a recession to its advantage
They can lower prices to make more sales
Can use it as a time to hire as people will take jobs on lower salaries
Why would Waitrose be more affected by a slump that Aldi
Due to Waitrose being a more high end product store people may go to Aldi as a cheaper alternative
Explain why a business such as B&Q might be positively effected by a slump
A lot of the items in places like B&Q are always going to be needed. Also if there is a high unemployment rate then people may have more time to do projects they have been meaning to do at home.
