1 / 6

What affects business cycles??

What affects business cycles??. Business investments. As economy is expanding, a business will invest in new technology and resources to increase production. This creates jobs and output---increasing GDP.

arthurparker
Download Presentation

What affects business cycles??

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. What affects business cycles??

  2. Business investments • As economy is expanding, a business will invest in new technology and resources to increase production. • This creates jobs and output---increasing GDP. • Eventually they will stop investing, demand for product will fall, and contraction within the business will occur.

  3. Interest Rates and Credit • When interest rates are low, consumers and businesses are more likely to borrow money to buy or produce items. • High interest rates = reduced borrowing for investment, consumption, and production.

  4. Consumer Expectations • Fear of weakening economy will cause less spending/investing. • Reduced spending from consumers causes contraction within businesses because demand has lowered. • All this lowers the nation’s GDP.

  5. External Shocks • Negative shocks: disruptions of oil supply, wars, droughts • Positive Shocks: discovery of new oil supply, nice growing season • Both types come without much warning!!

  6. The Great Depression • Stock Market dives in 1929—President Hoover does little about it. • Sustained contraction led economists to believe that intervention was necessary • Franklin Delano Roosevelt was elected and implemented many governmental programs aimed to aid the economy.

More Related