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Understanding the Business Cycle: Profits, Inflation, and Employment Dynamics

This activity explores the stages of the business cycle, highlighting how firms' profits fluctuate at each stage. As inflation falls and borrowing costs decrease, firms tend to invest more, leading to economic recovery. However, during recessions, unemployment rises, and profits fall. Understanding these relationships is crucial for recognizing trends in national output (GDP), consumer spending behaviors, and government tax receipts. Engage with the business cycle's phases to position each factor correctly and gain insights into economic dynamics.

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Understanding the Business Cycle: Profits, Inflation, and Employment Dynamics

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Presentation Transcript

  1. The Business Cycle Drag and Drop Activity

  2. Firms profits start to increase Position each at the correct stage of the business cycle Inflation falls Unemployment increases Inflation rises Cost of borrowing low Firms invest more Government tax receipts are at their highest Unemployment at it’s highest Firms profits fall Consumers start to spend more National Output GDP GDP Boom Recovery Recession The Business or Economic Cycle Time Downturn

  3. Position each at the correct stage of the business cycle Government tax receipts are at their highest Cost of borrowing low Firms profits fall Unemployment at it’s highest Inflation rises Firms profits start to increase Firms invest more Inflation falls Consumers start to spend more Unemployment increases National Output GDP GDP Boom Recovery Recession The Business or Economic Cycle Time Downturn

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