The Business Cycle

The four phases of the business cycle are:

• Expansion, Top , Decline, Bottom,

• Upwards, Peak, Downwards, Lowest

• Expansion, Peak, Contraction, Trough

• Increase, Highest, Contraction, Trough

During the expansion-phase, people will:

• Earn more and consume more

• Buy new goods for their house

• Eat out more

• All of these

During the expansion phase, businesses will:

• Employ more workers and invest in machinery and equipment

• Cut back on spending and reduce costs

• Work shorter hours

• Go on holiday because there's not much work

At the peak phase, businesses will:

• Be worried that they aren't making money

• Have to sack workers

• Be so busy that they can't keep up and need more staff

• Have equipment that is not being used

In the contraction phase, businesses will:

• Notice that things are slowing down a bit

• Notice that things are getting busier

• Be hiring more staff

• Be buying new equipment

In the contraction phase, workers will notice that

• Things are still very busy

• There is plenty of overtime

• Overtime has dropped-off, and they are not as busy as before

• The boss gives everyone a pay rise

In the trough phase, businesses will

• Be making lots of money

• Be buying lots of new equipment

• Be sacking staff, cutting costs and avoiding spending money

• Be hiring more workers

In the trough phase, workers will

• Be worried about losing their jobs and are avoiding spending money

• Be booking their next overseas holiday

• Be buying a new car

• Be buying a bigger house