Business Cycle Intro A 23-24-GC

Low sales even in a
healthy economy signal „complete

shift in shopping”
The economic situation in 2016
Synonyms? ↗
Healthy economy,
Thriving economy,
Growing economy: Expanding economy,
-Low interest rates Recovery, Upturn,
Boom
-Low unemployment rates
-Low oil prices
-High stock market
-Healthy property prices
I. What happens as a result?
1) low interest ratesa) homeowners feel safe (not
losing value)
2) low unemployment b) capital for investments
rates plentiful
c) more money to spend
d) cheap money (easy to
3) low oil prices
borrow)
e) guaranteed income
4) high stock market f) saving discouraged
g) lower production costs
5) healthy property h) loans more easily obtained
prices
i) investing a better option
What happens as a result?
1) low interest rates d) cheap money (easy to borrow)
f) saving discouraged
2) low unemploymenti) investing a better option
rates e) guaranteed income
h) loans more easily obtained
3) low oil prices
c) more money to spend
g) lower production costs
4) high stock market
b) capital for investments plentiful

5) healthy property
prices a) homeowners feel safe (lifetime
investment not losing value)
What happens as a result?
saving discouraged Ability
income ____)
(______, loans
cheap money (easy to borrow) and
guaranteed income willingness
loans more easily obtained (________,
confidence
___
low _____)
prices
more money to spend
to spend!
homeowners feel safe (not losing value) = _________
DEMAND
investing a better option than saving Availability of

capital for investments plentiful ______
capital &
lower costs.
lower production costs
The economic situation
Synonyms? ↗
Healthy economy,
Thriving economy,
Growing economy:
Expanding economy,
-Low interest rates Recovery, Upturn,
-Low unemployment rates Boom
-Low oil prices
Antonyms? ↘
-High stock market
Shrinking economy,
-Healthy property prices Receding economy,
Recession, Depression,
Slump
What happens in a recession?
Receding economy:
HIGH OR LOW?
HIGH interest rates
-_____
HIGH unemployment rates
-_____
HIGH oil prices
-_____
LOW stock market
-_____
Shrinking economy,
-Falling property prices
Receding economy,
Recession, Depression,
Slump
Let’s Kahoot!
… to better understand our behaviour as
consumers!
The Business
? Cycle
PEAK
PRONUNCIATION
TROUGH? /trɒf/
Disambiguation!
Please do not confuse the following concepts:
In Business English 2:
•Business cycle JE poslovni ciklus
•Business cycle NIJE:
– Product life cycle (životni ciklus proizvoda)
– Životni ciklus poduzeća
– Investicijski ciklus
→ HO The Business Cycle (Task II)
→ MK, p 114: Vocabulary 1
1 downturn
2 upturn
3 expectations
4 consumption
5 balance of payments
6 GDP
7 demand
8 supply
9 save
Viewing/listening: THE BUSINESS CYCLE
http://www.youtube.com/watch?v=EMHkiKxtlvw
III. Make notes to capture the most important info:
• “ a backwards rollercoaster”
• 3 indicators of recession by NBER
• definition of recession
• 4 phases
• economic trends in recession / recovery
• V-shaped recession vs. U-shaped recession

• NBER = National Bureau of Economic Research
• 3 indicators of recession by NBER:
• GDP = gross domestic product
• employment
• wholesale – retail trade
• Definition of recession:
– 2 or more consecutive quarters of negative economic
growth
• 4 phases:
• Peak
• Recession
• Trough
• Expansion (recovery)
• Economic trends in recession:
o C_o_n_ su _mer spending slows
o Inv_e _n _t o_ries build up
o Companies r_ e_d_u _e
c output & layoff employees
o Unemployment r_i s_ e_s
• Economic trends during a recovery

o Activity ac_c _e _l e
_ _r a
_ _t es
o Consumer spending i_n _c _r e_ a_ s_ e_s
o New orders are placed
o Companies increase output & a_d _d employees
o Unemployment d_e _c _l i_n_ e_ s
• economic trends in recession:
– Consumer spending slows
– Inventories build up
– Companies reduce output & layoff employees
– Unemployment rises
• economic trends during a recovery

– Activity accelerates
– Consumer spending improves
– New orders are placed
– Companies increase output & add employees
– Unemployment declines
Collocations: recession vs. expansion
• economic activity slows down • economic activity picks

up again
• consumers spend less money
• sales improve
• businesses make fewer sales
• excess inventories are
• inventories build up used up
• companies earn less revenue • new orders are placed
• fewer orders are placed • production is ramped up
• businesses cut back on output again
• unemployment rate goes up • job opportunities improve
• unemployment rate
• businesses reduce the number
comes down
of people on payrolls
• eventually it tops out
• eventually it reaches a trough
Collocations: recession or expansion?
1.E economic activity picks up 8.R businesses cut back on

again output
2.R businesses make fewer sales 9.R unemployment rate goes
up
3.E excess inventories are used
10.R eventually* it reaches a
up trough.
4.R companies earn less revenue 11.E eventually it tops out
5.E new orders are placed 12.R consumers spend less
6.E production is ramped up money
again 13.E sales improve
7.E job opportunities improve
*at an unspecified later time,
in the end
V-SHAPED OR U-SHAPED
RECESSION?
• slowdown lingers*
• begins abruptly • takes a long time for
• reaches a trough activity to pick up
again
quickly
• recovers quickly
* to remain existent
although often waning in
strength, importance, or
v influence
U
HW: MK, p 114-115
• Read and fill in the gaps
+ Comprehension (complete sentences)
• Watch
https://www.khanacademy.org/economics-finance-domain/macroeconomics/aggre
gate-supply-demand-topic/business-cycle-tutorial/v/the-business-cycle
3 min – defines the cycle

and answer the following questions:
1. How is the general growth trend in productivity explained?
2. Which causes of the business/economic cycle, mentioned
in the text on p 114, the video does not mention?
3. Which words denoting emotions you learnt from the video?

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Low sales even in a

healthy economy signal „complete

b) capital for investments plentiful

investing a better option than saving Availability of

III. Make notes to capture the most important info:

• 3 indicators of recession by NBER

• economic trends in recession / recovery

• V-shaped recession vs. U-shaped recession

• Economic trends during a recovery

• economic trends during a recovery

• economic activity slows down • economic activity picks

1.E economic activity picks up 8.R businesses cut back on

3 min – defines the cycle

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