1. Topic 1: Introduction to Economics Concept: The Business Cycle
Year 11 Economics
Topic 1: Introduction to Economics
Concept: The Business Cycle

2. The Business Cycle
The Business Cycle is a series of cycles which is characterised by 4 main phases: upswings, booms, downswings and troughs (which may lead to a recession)
The business cycle maps the patterns of productive activity i.e. GDP per year

3. The Business Cycle
Graphically the business cycle presents the changes in GDP within an economy
It therefore highlights a series of fluctuations in the level of economic growth within an economy due to either domestic or international factors

4. During a Boom
A boom refers to the increase in economic activity associated with increasing investment and production. It leads to increasing demand for labour and a fall in unemployment. Individuals disposable income increases and this leads to further consumption and therefore further economic expansion
In this phase of the cycle expenditure, output, income and employment levels reach a maximum point as economic activity peaks. Shortages of labour and resources may occur leading to inflation

5. During a Recession
A recession is the stage of the business cycle where there is decreasing economic activity defined as 2 consecutive quarters (6 months) of negative economic growth i.e. reduction in GDP
In this phase of the cycle expenditure, output, income and employment opportunities reach a minimum point as economic activity troughs. Not all troughs lead to a recession

6. The Business Cycle

7. The US Business Cycle DOWNSWING BOOM UPSWING DOWNSWING TROUGH
RECESSION

8. Impacts of the business cycle
Recession
Boom
production of G&S
levels of consumption and
investment
unemployment
income levels
quality of life

9. Business Cycle – You Tube
Activity:
Watch this animation and from your analysis, identify 5 characteristics of an upswing/boom and 5 characteristics of a downswing/recession