Businesses cycle

• Boom

  • GDP is high
  • Production reaches maximum capacity
  • Shortages
  • Price increases
  • Shortages of skilled labour
  • Wages rise
• Recession

  • Incomes start to go down
  • Demand goes down
  • Business confidence is reduced
• Slump

  • GDP is at a low
  • Businesses close factories
  • Redundancies
  • Unemployment is high
  • Businesses become insolvent or go bankrupt
• Recovery or upswing period

  • Production increases
  • Employment increases
  • People have more money to spend
• Gross domestic product (GDP)


  A measure of the value of all final products in a country
• Business cycle

  • Boom
  • Recession (downswing)
  • Slump
  • Recovery (upswing)
  • Long-term trend
• Income elasticity of demand


  Affects how much a business is impacted by the business cycle
• Income inelastic products


  • Staple foods