ECONOMICS

ECONOMICS

Economics

Introduction Task 1: Business Cycle

The fluctuating and repetition g levels of economic activity that is experienced over a long period of time. Business cycle at one time was thought to be extremely regular and predictable. But now it is irregular and unpredictable. The business cycles are recorded to the direction when the economic activities changes. Business cycle refers to the abnormal but periodic movements upward and downward in the economy, that is measured by other economic indicators and the real GDP fluctuations. The timing of business cycles is random and unpredictable. The four phases of business cycles are:

1) Contraction: In this phase the economic activity is slow 2) Trough: The turning point that is the lower portion where a contraction transforms to an expansion phase of a business cycle

3) Expansion: It is the speed up of the economic activity also referred to as boom. 4) Peak : the upwards turning of the business cycle 5) Recession: A recession occurs when the contraction is severe. 6) Depression: a long and deep trough is called depression

Figure:

Economic Indicators

The UK enjoyed a growth over the last fifteen years from 1993 through the end of 2008. In the year 2009, UK economy suffered a deep recession in which the real GDP fell to 4.4% and there was a steep rise in the rate of unemployment. Because of this the pace of economic growth and expansion in UK has slowed down growth to only 0.7% in 2011. There was weaker forecast for 2012. In reference to the 2nd quarter of 2012, the data showed that the UK economy has again fallen into recession known as double dip. The level of GDP remained below peak at the end of the last cycle. 1) G.D.P:

The monetary value of all the services and finished goods produced within a country during a particular period of time. GDP is calculated on a yearly basis. For example, if the GDP is 5% then it means that the economy has grown by 5 %.GDP includes the government spending, investment, public and private consumption and exports less the imports within the country. The formula for GDP is; GDP= C+I+G+NX

GDP is the general indicator of the economic health of the country, the standard of living of the people of that country can be judged by the GDP. The measurement of GDP is complicated however there are different approaches for the calculation of GDP. One is the “Income Approach' and the other is the 'Expenditure Approach'. The term economic growth and production mean GDP. GDP is a measure of the Economy of the country, for example if the GDP is high, it means that there is low unemployment and wages increase. A significant change in the GDP has a great change in the stock market and the businesses.

2) Inflation

The overall increase in the services and goods prices in an economy. Inflation is often caused by the increase in the supply of ...