All countries experience regular ups and downs in the growth of output, jobs, income and spending.In some years, countries will experience high rates of economic growth in which the country experiences a boom. In other years, economic growth is low or even negative and the country experiences a slowdown or recession.
This cycle of booms and recessions is known as the economic cycle. While there may be an underlying steady longrun trend, most economies experience an economic cycle that is measured by changes in national income. If a government can provide stability, then it can help the economy grow faster in the long run. Figure 1 shows short-term fluctuations of national income (real GDP) around the long-term trend.
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