Business Cycle Flashcards
1
Q
Business Cycle is…
A
The observed pattern of increases and decreases in economic growth ( measured by % change in GDP) over time
2
Q
Recession/ Slump:
A
Some businesses could thrive during a recession or slump like lower value supermarkets. Selling assets would also benefit like the gold market
3
Q
Why is there less business investment during a recession or slump?
A
- less finance is available (credit crunch)
- lower returns from investment
- precautions
4
Q
What could the MPC do to help an economy recover?
A
Decrease interest rates to encourage spending
5
Q
How will businesses respond during a period of recession/slump?
A
- Make redundancies
- Sell assets
- Advertise more or less
6
Q
Boom/ Recovery:
A
When confidence is high so will investment be. High employment levels so spending in the economy will increase. Inflation may be above target during a boom because there is lots of spending/ saving
