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The effect of the business cycle

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by

Hugo Flower

on 4 March 2015

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Transcript of The effect of the business cycle

By the end of the lesson you will be able to:
1. Understand the concept of the business cycle
2. Apply this knowledge to businesses and analyse the impact changes in the cycle can have.
Topic 1.5.27: The impact of the business cycle
The Impact of the
Business Cycle
Watch the following video and write down the disadvantages of a recession.

1. For consumers
2. For businesses

Activity:
Investigate a business that has been affected by the recent recession. Did they do well or badly? Why?
Homework:
Starter:
On a rough piece of paper, answer the following questions:

What type of businesses are happy if the pound weakens against the dollar?

Give a numerical example of the pound strengthening against the euro
UK GDP 2004 - 2009
Topic 1.5: Understanding the economic context
27. The Impact of the Business Cycle
Difficult to arrange finance
Luxury companies hit hardest
May be forced to close if sales are hard hit
Confidence falls
Cut back on luxuries first
Avoid big outlays e.g. building work, cars etc
Many people lose jobs
All types of business do well e.g. restaurants, builders, car dealers, banks etc
New businesses start up
(It’s easy to make money in times of growth!)
Confident about job security
Reasonable pay increases
Happy to spend money, especially on big purchases
Go out socially more often
How does it affect businesses?
Topic 1.5: Understanding the economic context
27. The Impact of the Business Cycle
The “Economy” is all the people and businesses buying & selling in a country
The Economy!
Topic 1.5: Understanding the economic context
27. The Impact of the Business Cycle
Note: There can be economic downturn without recession!
The Economic Cycle
Z: Rising government spending
S: Increasing supply of credit
R: Imports of sewing machines rise
W: Shops delivering lunchtime sandwiches to offices raise their prices
Y: Citizens Advice Bureau gets more callers
X: Oil refineries report a reduction in stocks
V: Sales of milk chocolate start to decline
U: More skips start appearing on the streets
T: The cost of shipping goods around the world starts to rise
Q: Fast food shops cut their prices
P: Growing mountain of unsold bricks
O: More rental housing available
S
Z
Y
X
W
V
U
T
R
Q
P
O
N
M
L
K
J
I
H
G
F
E
D
C
B
A
The economic cycle in pictures

Put the letter corresponding with the picture above on the economic cycle where you think it should go.
Time
Real GDP
N. Rising car sales
J: Rising air traffic
I: Home delivered pizza becomes more popular
F: More people use pawnbrokers
L: Rising lipstick sales
M: Rising real income
E: Rising demand for steel
K: Falling share prices
H: Slower delivery times
D: Rising homelessness
C: Increasing hours of overtime
G: Rising quantity of mail
B: The number of job vacancies rises
A: Rising house construction
time
Economic
Growth
Full transcript