Unit 1 - Understand the Role of Business in the Global Economy Objective 1.02 – Understand Economic Conditions Topic – Classification of Economic Conditions

Economics All this production has ups and downs, caused by any number of things. Layoffs, old equipment, new technology, etc. Movement of an economy from one condition to another (the ups and downs) make up the Business Cycle The business cycle has four stages Prosperity Recession Depression Recovery

The Business Cycle- Prosperity Prosperity – a peak of economic activity (the good times) Unemployment is low Production is high New businesses open

The Business Cycle- Recession Recession – an economic slow down. Spending decreases Demand decreases Productivity decreases Unemployment rates rise

The Business Cycle- Depression Depression – a deep recession that lasts for many years. Very high unemployment Very low productivity Shortages in goods (since people aren’t working to produce as much)

The Business Cycle- Recovery Recovery – A rise in business activity after a recession or depression. Unemployment goes down Production goes up Renewed demand

The Business Cycle Recovery Depression Recession Prosperity