Chapter 3 - The external and internal environment

Question 1

What is the boom in a business cycle?

Answer 1

The economy is growing, unemployement is low and consumer demand is high

Question 2

What is the downturn in a business cycle?

Answer 2

Inflation starts to rise and so do interest rates, the economy slows down

Question 3

What is the recession in a business cycle?

Answer 3

The economy starts to shrink, unemployment starts to rise and business may begin to struggle

Question 4

What is recovery in a business cycle?

Answer 4

Interest rates are lowered after a recession to boost the economy

Question 5

What is demand-pull inflation?

Answer 5

Demand increases and businesses cannot meet the demand, the price goes up

Question 6

What is cost-push inflation?

Answer 6

Supply decreases because of an increase in production costs, this results in the price of the item going up

Question 7

What are the axes for a demand curve?

Answer 7

Y axis = price, X axis = quantity

Question 8

What are the axis for a supply curve?

Answer 8

y axis = price, x axis = quantity