6.1.1 Business Cycle
Instruction :
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Go through all instructions and course details thoroughly before starting each lesson or activity.
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Watch the attached video lessons attentively and take clear, organized notes in your notebook.
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Write all answers for the attached worksheets in your notebook. Make sure your work is neat and properly labeled.
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Revise your notes and completed worksheets after each lesson to reinforce understanding.
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If you face any difficulty or have questions, note them down and contact your instructor or course coordinator for guidance.
Click to download the Video Lecture Handout.
Good morning, everyone.
Today we’re learning about the Business Cycle. The business cycle is the pattern of ups and downs that happens in a country’s economy over time. Sometimes the economy grows fast, and other times it slows down. These changes affect how much people earn, spend, and how businesses perform.
There are four main stages of the business cycle — Growth, Boom, Recession, and Slump.
Let’s start with Growth, also called Recovery. This is when the economy starts improving after a slowdown. Businesses produce more, more people find jobs, and customers begin spending again. For example, a mobile phone company may increase production because more people can now afford new phones.
Next comes the Boom. This is the best stage of the cycle when the economy is at its highest point. Businesses are making strong profits, unemployment is low, and people are spending freely. However, demand is so high that prices begin to rise — that’s inflation. For instance, a hotel might raise room prices during a busy holiday season because everyone wants to book.
Then comes the Recession. This is when economic activity starts falling for several months. GDP drops, unemployment rises, and consumers cut back on spending. A car company might reduce production or lay off workers because fewer people are buying cars.
If the recession continues for a long time, it turns into a Slump or Depression. This is the lowest point of the cycle. Businesses may close down, unemployment is very high, and people spend very little. For example, small shops might shut down because customers can’t afford to buy much.
Now, these stages affect businesses in several ways.
When employment is high, people have more money to spend, so sales rise. But it becomes harder for companies to hire workers because everyone already has a job. During a slump, unemployment is high, so it’s easier to find workers — but customers are buying less.
Inflation also affects business. When prices rise quickly, costs such as wages and materials go up. Businesses might raise prices too, but that can reduce sales. For example, a bakery may increase bread prices when flour costs rise, but some customers might stop buying.
Lastly, GDP — the total value of goods and services produced — shows how the economy is performing. When GDP is rising, it’s a sign of growth and opportunity. When GDP falls, businesses become cautious and may delay expansion plans.
So to sum up — the business cycle moves through Growth, Boom, Recession, and Slump. Each stage affects employment, inflation, and GDP, which in turn influence how businesses plan and make decisions. Smart businesses watch the economy closely so they can prepare for changes and make the best choices at the right time.
By the end of today’s lesson, you should be able to describe the four stages of the business cycle and explain how each one affects business activity.
Great work, everyone!
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