The Business Cycle

• Recession - a period of significant decline in economic activity (typically lasting six months) marked by a decrease in GDP, higher unemployment and lower consumer spending
• Depression - severe and prolonged downturn in economic activity. It is much worse than a recession, lasting for several years with very high unemployment, widespread business failures and a significant drop in economic output.
• Inflation - where there is too much spending and the economy cannot produce more goods and services to meet demand. This additonal spending increases prices.
• Boom - a period of strong economic growth in the business cycle where businesses make more money, lower unemployment and spending increases. It is a time of high demand, increase productivity and rising confidence in the economy, where businesses lower prices
• Fluctuation depend on:

  • Consumption
  • Investment
  • Government spending
  • expert