Describes the tendency of economic growth rates in a market economy between high economic growth periods and periods of harsh recessions
Boom Periods
Where excess demand for goods and services cause price increases, leading to substantial economic prices
Recession
High inflation can force an increase in interest rates, increasing unemployment, business failures and other economic and social problems
Government Macroeconomic Policies
Fiscal and Monetary policy
Government Microeconomic Policies
Competition and Trade policy
To achieve stable levels of economic growth while minimising effects of interest and unemployment, the government intervenes though economic stabilisation policies
Excessive Growth Periods
Government attempts to reduce economic activity by spending less, increasing taxation or increasing interest rates
Recession Periods
Government attempts to stimulate economic growth with increased government spending, tax cuts and low interest rates
