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Flashcards in Business Cycle Deck (19)
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1

Stages of business cycle

Boom, downswing, trough, upswing

2

Boom

Above average rate of economic growth/activity

3

Recession

2 negative quarters of economic growth

4

Contraction/downswing

Slowing growth rate

5

Bottleneck

Shortage of labour/productive capacity

6

What is a main factor affecting the business cycle?

Firm investment in new capital, level of sales

7

Trough

Aggregate expenditure below economy's potential

8

Cyclical unemployment

Unemployment due to a lapse in economic activity

9

Lagging

Not expected to show until after a change in economic activity

10

Leading

Before a change in economic activity

11

Coincident

Occurs during a change in economic activity

12

Types of economic indicators

Leading, lagging, coincident

13

Long term trend

Line of best fit

14

Features of boom

Confidence, high consumption expenditure (luxuries, durables), profitability, utilisation of productive capacity, low cyclical unemployment, high labour market participation, high inflation, high borrowing

15

Features of contraction

Increased YEO of boom levels off, slower growth, uncertainty decreases confidence, short and sharp, risk to invest

16

Bottleneck

Shortage of labour or productive capacity

17

Features of trough

Higher cyclical unemployment, reduced profit, lower durable sales, lower consumer/business confidence, reduced inflation, higher savings, lower interest rates, lack of confidence,

18

Expansion features

Replace worn capital equipment, gradual rise of economic activity/confidence, resume long term growth, longer than downswing, increased investment, increased capacity of firms to produce final goods

19

Periods of sharp declines

1990, 2008-9