Essay About Population Increases And Investment Spending Of Businesses

Business
Essay Preview: Business
Report this essay
Business cycle – a pattern set by growth or decline in real GNP. (phases: expansion, peak, contraction, and trough.)
Expansion – a period of growth in real GNP.
Peak – the highest point in a business cycle.
Contraction – period of decline in real GNP.
Trough- lowest level the economy reaches during a business cycle.
Recession – during the contraction phase of the cycle real GNP declines for two consecutive quarters, or six months.
Depression – if a recession is severe and persistent, maybe people out of work and many businesses closed.
If population increases while production of goods and services remains the same, everyones share of goods and services will be smaller.
A combination of increasing supply and increasing demand can cause an economy to enter a long expansionary phase of the business cycle.
If population grows because of a higher birthrate, demand for certain kinds of goods and services will increase soon.
If population growth results from immigration, the effects will be different.
Investment spending of businesses on capital resources, such as machines, tools and factories is another important factor.
It works with the multiplier effect and acceleration principle.
Investments may be either autonomous or induced.
Autonomous Investment – results from influences outside the economy.
Induced investment – encouraged by factors in the economy.
Productivity – the efficiency with which goods can be produced.
2 factors that improved productivity are expanded education and capital investment.
Consumer attitudes and expectations influence the general trend of the economy.
A change in attitude about inflation also may cause a change in consumer spending patterns.
Full