2.5.3 Trade (business) cycle, 2.5.4 The impact of economic growth
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8 Terms
Understanding of the trade (business) cycle
Characteristics of a boom / a recession
The benefits & costs of economic growth on consumers
Benefit: can afford a greater level of consumption due to higher income - consumption increases, higher living standards - can afford to buy more goods & services
Eval: Demand-pull inflation due to rise in consumption
The benefits & costs of economic growth on firms
Benefits: rising sales - so more profit
Costs: Resources may become more costly
The benefits & costs of economic growth on the government
Benefits: create more tax revenue for public services
Costs: need to spend more due to rising inequality & environmental damage
The benefits & costs of economic growth on current & future living standards
Current: Improvements to all groups due to higher incomes
Inflation, inequality increases, imports increases, environmental impacts
What is a recession
6 months (quarters) of negative economic growth
Characteristics of a recession
A decrease in real output (production) causes a decrease in the demand for labour and therefore an increase in unemployment