The Business Cycle
Introduction to Business & Marketing
The Business Cycle
Economies naturally go through ups &
downs.
 The business cycle is the rise and fall of
economic activity over time.
 In the United States…

 Economic
“slumps” in 1930s, 50s, 70s, 2000s
 Fall in economic activity & rise in unemployment
 Slumps followed by new waves of increased
productivity and increased GDP
Stages of the Cycle

Prosperity

Recession

Depression

Recovery
Prosperity




Also known as the
“peak”
Higher wages, more
jobs available, higher
demand for
goods/services
Unemployment is
low, GDP is high
People are spending!
Recession

Economic activity slows
down – less production of
goods, downturns in
industry

GDP decreasing,
unemployment increasing

People start to save!
Depression




Deep recession that
lasts for years and
affects the entire
economy
Unemployment is
high, GDP is low
Government starts
trying to “stimulate”
the economy
People are saving!
Recovery





Also known as “expansion”
Rise in business activity
after a recession or
depression
Innovation occurs –
business start bringing out
new products & services
Unemployment
decreasing, GDP
increasing
People start to spend!
Recession Article
“Entrepreneurship in the
Midst of Recession”
Read the article and complete the
entrepreneur chart, then answer the
discussion questions in full sentences.