CHAPTER 34 – ECONOMIC GROWTH AND SUSTAINABLE DEVELOPMENT i
The economic cycle describes the pattern of economic growth: boom, recession, slump and recovery.
Stage 1: Boom
Boom describes a period of above-average economic growth.
• The standard of living increases. • More revenue is generated for the government due to high employment rates and increased consumer spending.
• Inflation starts to increase. Stage 2: Recession
Recession is a period in which economic growth falls below average. It is also referred to as a bust.
• Unemployment rates begin to rise. • Consumer spending slows. • More businesses fail. • The government receives less income. • Inflation decreases and may cause deflation.
Stage 3: Slump
A slump occurs if a recession lasts for a long period of time. Economic growth is low and may even become negative.
• Unemployment rates are high. • Consumer spending is low. • Inflation is low.
Stage 4: Recovery An economy is said to be in recovery when its economic growth starts to rise again.
