1. The Business Cycle
An Economic Concept

2. Objectives Define the business cycle
Explain the four stages of the business cycle
Examine causes of the business cycle

3. The Business Cycle There are FOUR stages:
The cycle of economic growth & decline of an economy
There are FOUR stages:
Prosperity
Recession
Depression
Recovery

4. Also Known as Prosperity
Peak
The high point of the economic prosperity
The top of the business cycle
Customers are hopeful about the future
They increase their level of spending
Also Known as Prosperity

5. Also Known as Recession
Contraction
Demand starts to fall
The peak has passed
Considered “bad times” for businesses
Fewer sales and less profit is being made
People start to lose their jobs
Also Known as Recession

6. Also Known as Depression
Trough
Recession lasting years
Effects entire economy
Economic activities stop their decline
The low point of economic activity: low profits
Businesses begin to fail
People continue to lose jobs
Also Known as Depression

7. Expansion Rise in business activity after a recession or depression
The growth part of the cycle
Rise in business activity after a recession or depression
Consumers have a hopeful outlook about business and the economy
Demand is increasing
Also Known as Recovery

8. The Business Cycle

9. Some Causes of the Business Cycle
Government Regulations
Consumer Behaviors

10. Checkpoint Activity Can the SER industries profit during:
A recession? Explain.
A depression? Explain.
How can consumer behaviors affect the business cycle? What effects might this have on the SER industries?
What SER industries might continue to do reasonably well during a recession?