Referat TRADE CYCLE Everyday we read in newspapers, that the unemployment in Austria increases or falls, that the government has to do Sparpakete because they can not afford so much social costs anymore. In a TRADE CYCLE you can see how well the economy is. As you see in the graph the trade cycle begins with revival, recovery and expansion of a depression time period, where the economie wasn t so well. The business activities start to increase, people find jobs and therefore the number of unemployed people drops, and entrepreneurs start to invest. This will go on until a boom is reached which is the highest level that can be aimed. People are satisfied with their job because salaries and wages are high and they can afford more products. Therefore the capacity of production is raised to fulfil the great demand. Profits of firms reach a top level. And because economy is running well, interest rates have to be raised because that high inflation must be slowed down. After a boom there comes a slowdown, contraction, downswing and recession. First employers are fired and the firms aren t going well either. Although there are so many definitions how to describe a recession all in one you can say that recessions lower the level of the GNP of a country. The lowest level in the trade cycle is a depression, trough or slump. Production is slowed down because consumption isn t high. The number of unemployment increases and so does the number of closed firms. Government has to offer credits with ...
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