IGCSE BUSINESS STUDIES Topic : Business Cycle or Trade cycle

Business Cycle

The business cycle or economic cycle refers to the fluctuations of economic activity about its long term growth trend. The cycle involves shifts over time between periods of relatively rapid growth of output (recovery and prosperity), and periods of relative stagnation or decline (contraction or recession). These fluctuations are often measured using the real gross domestic product.
There are four main stages in a trade cycle or business cycle.

Growth	GDP is rising Unemployment is falling Business are experiencing rising profits ‘Feel good’ factor among the people as their incomes are rising.
Boom	Results from too much spending. Economy experiences rapid inflation Factors of production become expensive
Recession	Results from too little spending. GDP is falling Demand in the economy will fall leading to closure of firms and unemployment
Slump	High level of unemployment. Business will rapidly close down creating serious consequences for the economy.