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Recovery and boom in the business cycle

Gross domestic product (GDP). Gross Domestic Product (GDP) is the value of all thegoods and services produced in an economy over aperiod of time.GDP is therefore a measure of economic activity.. Economic growth. Economic growth occurs when there is an increase inGDP from one period of time t

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Recovery and boom in the business cycle

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    1. Recovery and boom in the business cycle

    2. Gross domestic product (GDP) Gross Domestic Product (GDP) is the value of all the goods and services produced in an economy over a period of time. GDP is therefore a measure of economic activity.

    3. Economic growth Economic growth occurs when there is an increase in GDP from one period of time to the next. If GDP falls, negative growth is occurring. The cyclical nature of economic activity is called the business cycle.

    4. The business cycle

    5. Recovery Characteristics: Rising demand and sales Cautious but increasing business confidence Unemployment begins to fall Investment opportunities are considered Production begins to increase

    6. Boom Characteristics: High confidence High levels of demand ?higher prices (inflation) High capacity utilisation Low unemployment Increased wages Businesses invest and expand Many business start-ups

    7. Boom Possible government/Bank of England responses: Increase taxes and interest rates to dampen demand and check inflation Reduce government spending

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