1. What is economics?
Do the first 2 bullet points as a class

2. Learning objectives
PASS
To describe different stakeholders who influence the purpose of Tesco and Quest
Merit
To explain the points of view of the different stakeholders trying to influence Tesco and Quest
Distinction
To analyse the influence these stakeholders exert on Tesco or Quest

3. What is the economy?
Economy “the state of a country or region in terms of the production and consumption of goods and services and the supply of money” “Careful management of available resources”

4. What is GDP?
Gross domestic product is how much a country produces over a period of time.
For nations, the GDP can be calculated by adding up its output (what it produces and sells) inside the borders of the country.
This measure is often used to find out how healthy a country is.

5. The Business Cycle:
If we drew a diagram of GDP over time, we would see a pattern something like this:
GDP
Print so that students can fill this in as they go along
Time

6. The Business Cycle:
If we drew a diagram of GDP over time, we would see a pattern something like this:
GDP
The long term trend is that GDP is going up.
Time

7. The Business Cycle:
However, it tends to go up for a while and then down and then up and so on.
GDP
Time

8. The Business Cycle:
This pattern of the economy doing well and then badly in cycles is known as the Business Cycle.
GDP
Time

9. The Business Cycle:
This point is known as a Boom: GDP is increasing. When GDP increases, it is known as Economic Growth.
GDP
Boom
Time

10. The Business Cycle:
This point is known as a Recession: GDP is decreasing. Economic Growth is negative.
GDP
Recession
Time

11. The Business Cycle:
When GDP is at the highest point in the cycle, this is known as a Peak.
GDP
Boom
Recession
Peak
Time

12. The Business Cycle:
When GDP is at the lowest point in the cycle, this is known as a Trough.
GDP
Boom
Recession
Peak
Trough
Time

13. What does this graph tell us?
THINK PAIR SHARE

14. The Business Cycle:
Businesses are affected by the state of the economy.
Generally, businesses do well in a Boom and badly in a Recession
During a Boom, people have more money to spend and they tend to be more confident of the future
- so they buy more things.
This is clearly very good for businesses.

15. The Business Cycle:
Businesses are affected by the state of the economy.
During a Recession, people have less money to spend and they tend to be less confident of the future
- so they buy fewer things.
This is clearly very bad for businesses.

16. However...
There are some exceptions to the rules
Some businesses do very well in recessions.
Can you think of a business that might do well in a recession? Why might they do well?
For example, Supermarkets may do well because people can no longer afford to go to restaurants to eat.

17. However...
There are some exceptions to the rules
Some businesses do poorly in Booms.
Can you think of a business that might do well in a recession? Why might they do well?
For example, Bus companies may do poorly because more people can afford to have cars.

18. The effect of the business cycle on businesses
Just a minute – choose one of the goods and discuss the business cycles and why it is or isn’t affected by the business cycle.

19. Businesses are affected by how well the economy is doing.
Summary:
Summary:
Businesses are affected by how well the economy is doing.
The economy goes through periods of Booms and Recessions - This pattern is known as the Business Cycle.
Most businesses do well in Booms and poorly in Recessions - but there are exceptions!

20. Key features of business cycle stages:
Summary:
Stages of Business Cycle
Key Features
Boom
Recession
Profit fall
Demand is low
Interest rates rise
Inflation increases
Investment falls
Some firms unable to satisfy demand

21. Likely reactions Key Features Likely reactions by Businesses Boom
Stages of Business Cycle
Key Features
Likely reactions by Businesses
Boom
Inflation increases
Some firms unable to satisfy demand
Interest rates rise
Recession
Demand is low
Investment falls
Profit fall
Firms look for new markets
Many firms close
Prices likely to rise
Workers are laid off
Demand is expected to fall
Wage rise

22. Summary: Key Features Likely reactions by Businesses Boom
Stages of Business Cycle
Key Features
Likely reactions by Businesses
Boom
Inflation increases
Some firms unable to satisfy demand
Interest rates rise
Prices likely to rise
Wage rise
Demand is expected to fall
Recession
Demand is low
Investment falls
Profit fall
Firms look for new markets
Workers are laid off
Many firms close

23. Let us look in more detail at how firms are affected by booms and recessions.
Most firms do well during Booms because the Demand for their products increases.
However, it can be more difficult to recruit workers during a boom because jobs are easier to find and there are fewer unemployed people looking for work. Firms may have to offer better pay or conditions in order to attract workers.

24. Also - land, raw materials etc. can be cheaper to buy.
Let us look in more detail at how firms are affected by booms and recessions.
Most firms do badly during Recessions because the Demand for their products decreases.
However, it is often easier to recruit people because there are plenty of unemployed people looking for work.
Also - land, raw materials etc. can be cheaper to buy.

25. Choose one of the questions below and come up with an answer.
Paired Questions:
Summary:
Choose one of the questions below and come up with an answer.
What can businesses do to avoid the worst impacts of recessions?
How does the trade cycle impact upon businesses?
Why do some firms benefit from increased trade during recessions?

26. Name:
Label the sections of the business cycle and then write a description for each section
GDP
Print for Plenary
Time

27. Begin P5
Slide 1 – An introduction which describes what the economy is and what it involves
Slide 2 – An illustration and description of the different stages in an economic cycle
Slide 3 – Graph showing current growth or decline in the UK – the chart should be recent (e.g. last 10 years). You must label:
Peak
Trough
Period of growth
Period of decline
The most significant point