Unison Business Cycle

Pak Hin Leung

UNISON Business Cycle

4 February 2016

Introduction to Business GEB-1011-79941

1. Describe the stages of the business cycle.

There are total four stages in a business cycle. They are boom, downturn, recession and recovery. The Gross Domestic Profit (GDP) is one of the ways to determine which stage are we in. The first stage is boom, where the economic growth takes place. The business investment, consumer spending and the GDP increase in this stage. The next stage is downturn. Compared to the economic growth in the boom, the economic growth during the downturn must be slower than that of the boom. Also, if there are negative economic growths in two to three consecutive months, then the economy is in the recession stage. During the recession stage, the size of market will decrease significantly because consumers would not spend much money. The last stage is recovery, which follows the recession. In the recovery stage, the economy becomes stronger again. However, the recovery stage would be slow at the beginning because consumers and businesses lack of confidence after the recession.

1. Explain how a recession affects low-income families. Provide examples to support your repose.

There are a lot ways to affect the low-income family during a recession. Firstly, in order to reduce the expenditure, most companies would like to lay off the employees. Their targets are usually the junior employees, who are mostly likely from the low-income family. Moreover, some companies may be forced to close due to the recession. Therefore, the recession leads to the high levels of unemployment. As a result, a recession can reduce or cut off the income of the low-income families. Secondly, most of the low-income families rely on the relief payments from the government for their daily lives. However, when it is in recession, the government would like to reduce to benefit due to the government’s benefit reform. Therefore, the recession does not only reduce or cut off the salary of the low-income families, but also reduce their benefits from the government. Lastly, recession can lead to increasing levels of personal debt either. During the recession, the low-income families do not have enough money for their daily lives; therefore, they would like to using credit or borrowing money. This is one of the ways to affect the low-income families during the recession as well.