Y10 Business Studies - C27 Economic Issues

What are the four main stages of the business cycle?

• Growth, Boom, Recession, Slump

• Expansion, Peak, Decline, Recovery

• Inflation, Deflation, Stagnation, Growth

• Surge, Peak, Drop, Recovery

What happens during the Boom stage of the business cycle?

• Unemployment reaches very high levels

• GDP is rising and unemployment is falling

• Prices start to rise quickly and there are shortages of skilled workers

• GDP starts to fall and demand decreases

How does rising inflation impact businesses?

• It has no effect on businesses

• It decreases business costs

• It increases consumer spending power

• It leads to falling sales due to increased prices

What is one of the government economic objectives?

• High inflation

• Low unemployment

• High unemployment

• Economic decline

What is the effect of high unemployment on the economy?

• Lower total output

• Increased production of goods

• Increased consumer spending

• Higher living standards

What does a recession indicate?

• GDP is rising

• GDP is falling

• Unemployment is low

• Inflation is stable

What is a consequence of rapid inflation?

• People buy more local goods

• Real incomes increase

• Businesses expand rapidly

• Living standards may fall

What can businesses do in response to changes in interest rates?

• Ignore the changes

• Increase prices of products

• Decide how to react to changes

• Reduce production costs

What is the impact of increasing GDP on businesses?

• Unemployment rises

• Sales may decrease

• Living standards decline

• More people have jobs and income to spend

What is the balance of payments?

• The level of inflation in the economy

• The total amount of government spending

• The rate of unemployment

• The difference between imports and exports