1. THE BUSINESS CYCLE UNIT 23

2. Recession in the news… US slips back into recession
EU sees recession, record dole
queues this year
UN report predicts likely global
economic downturn in 2013
LEAD-IN p. 114

3. /trɒf/ Growth- expansion, upturn Peak- GDP tops out
Trough /trɔf/- economic activity bottoms out
Recession- contraction /kən’trækʃən/, downturn
The Business Cycle
the recurring and fluctuating levels of economic activity that an economy experiences over a long period of time (

4. Viewing http://www.youtube.com/watch?v=EMHkiKxtlvw
“a backwards rollercoaster”
3 indicators of recession by NBER
definition of recession
4 phases
economic trends in recession
V-shaped recession v. U-shaped recession

5. Collocations: recession or expansion?
businesses cut back on output
unemployment rate goes up
eventually* it reaches a trough.
eventually it tops out
consumers spend less money
sales improve
* at an unspecified later time, in the end
economic activity picks up again
businesses make fewer sales
excess inventories are used up
companies earn less revenue
new orders are placed
production is ramped up again
job opportunities improve

6. Collocations: recession v. expansion
economic activity picks up again
sales improve
excess inventories are used up
new orders are placed
production is ramped up again
job opportunities improve
unemployment rate comes down
eventually it tops out
economic activity slows down
consumers spend less money
businesses make fewer sales
inventories build up
companies earn less revenue
fewer orders are placed
businesses cut back on output
unemployment rate goes up
businesses reduce the number of people on payrolls
eventually it reaches a trough

7. V-SHAPED OR U-SHAPED RECESSION?
begins abruptly
reaches a trough quickly
recovers quickly
slowdown lingers*
takes a long time for activity to pick up again
* to remain existent although often waning in strength, importance, or influence v U

8. What happens to GDP in a business cycle?
READING (MK, p. 114,115)
What happens to GDP in a business cycle?
What happens during an upturn? (What tends to rise?)
What is a boom?
What happens during a downturn? (What falls?)
What is the difference between a recession and a depression? (Synonyms?)
What is the most probable cause of the business cycle?
How do people behave in good times? And in bad times?
How is investment connected with demand?
How is internal theory different from external theory?
What is creative destruction?
Comprehension

9. IDEAS FOR MINI TALKS Joseph Schumpeter :economic ideas
The Great Depression