Business Cycle

Question 1

Business cycle Def

Answer 1

→ never ending process of inevitable ups and downs in the economy
→ fluctuations in economic acvity that an economy experiences over a particular period of time

Question 2

expansion

Answer 2

Expansion:

• production
• disposable income
• sales increase,
• more investments)

Question 3

Boom

Answer 3

boom:
- dividends go up
- employment wages/salaries/spending power are very high,
- prices increase

Question 4

recession

Answer 4

recession:
- sales decrease,
- less investments,
- high unemployment, shrinking output,
- volatile currency fluctuations,
- many bankruptcies,
- decline in country’s GDP

Question 5

Depression

Answer 5

Depression:

• share prices/dividends go down,
• employment/wages/salaries/spending power are very low/stagnate,
• prices decrease

Question 6

Governments activities against recession

Answer 6

government’s activities against recession:

lowering taxes, lowering interests rates for loans, encourage foreign direct investments

Question 7

government’s activities against boom

Answer 7

government’s activities against boom:

setting price limits, raising taxes/ interests