1. The Trade/Economic/Business Cycle The characteristics of slump, growth, boom and recession

2. What is the Economic Cycle?
A line graph illustrating fluctuations in GDP (gross domestic product) over a period of time.
The fluctuations are referred to as periods of growth, boom, recession and slump in GDP.
These periods exhibit a range of characteristics with regards to inflation, unemployment, interest rates, wages and retail sales.

3. What is GDP?

4. The economic cycle GDP Trend rate of growth (2%) Actual rate of growth
Time
Negative output gap
Positive output gap

5. The economic cycle
Points 1-3 refers to a contracting/shrinking economy and recession if this is recorded for 2 quarters
Points 1-2 show recession above the TRG
Points 2-3 show recession below the TRG
Point 3 is known as a period of slump or ‘stagnant’ economy
Points 3-5 refers to an expanding economy and growth if this is recorded for 2 quarters
Points 3-4 show growth below the TRG
Points 4-5 show growth above the TRG
Point 5 is known as a period of boom or an economy that is ‘overheating’

6. Characteristics of Slump, Growth Boom and Recession
Highest, lowest, rising, falling
Inflation
Interest Rates
Unemployment
Wages
Retail Sales
Slump
Growth
Boom
Recession

7. Characteristics of Slump, Growth Boom and Recession
Inflation
Interest Rates
Unemployment
Wages
Retail Sales
Slump
Low levels and little inflationary pressure
Lowest rates of interest
Highest levels of people out of work
No rises and potentially a cut in wages for non key workers
Lowest levels of spending
Growth
Rising inflationary pressure. Inflation likely to rise
Tendency for interest rates to rise
Unemployment rates starting to fall
A gradual rise, particularly in sectors where growth is experienced
Rising sales levels
Boom
Higher levels of inflation and pressure to rise still further
Highest rates of interest with the potential to rise still further
Potentially lowest levels of unemployment
High rates particularly in growth areas
Highest levels o spending
Recession
A reduction in inflationary pressure. Inflation likely to fall
Falling interest rates
Unemployment rates starting to rise
No more rises and sectors slowing down may experience a cut in wages
Falling sales levels

8. Multiple choice qns June 2013, qn24 June 2012, qn3 June 2012, qn4

9. Homework
Friday 27/01/2017
Create an Economic Cycle Revision Map.