This is a presentation on the business cycle.

1. Grade 12 – Economics
Unit 2

2. The economy has 4 stages in the
business cycle

3. Fluctuations occur repeatedly as the
economy experiences with the following
turning points.
• Peak
This is the highest point in the upswing of a business
cycle. This is generally through the expansion period
PEAK
• Trough
TROUGH
This is the lowest point in the downswing of an
economy. This is generally through the recession
period.

4. EXPANSION
This is between when an economy comes out of a
through and toward a peak. Economic recovery also
known as a boom.
RECESSION
The contraction phase is when the cycle goes down
from the peak of a cycle to the trough of an
economy.

5. Features of a business cycle in
expansion phase
• The level of economic activity increases
• More goods and services are produced as the
output of the country increases(Demand )
• Levels of employment increases (More jobs)
• Household expenditure increases(Income)
• Interest rate decreases (Loans)
• Rate of inflation Increases(Control spending)

6. Features of a business cycle in
recessionary phase
• The level of economic activity decrease
• Fewer goods and services are produced(Demand
decreases as no money)
• Employment decreases (Not enough money to
expand economy through jobs)
• Spending declines(Income becomes less –
expenses increase)
• Interest rates increase(Loan repayments increase)
• Rate of inflation decreases

7. Explanation for the business cycle.
• Exogenous and “in”endogenous explanations.
EXTERNAL – outside market
system
INTERNAL -Factors which originate in the market
system
Climate conditions(FLOODS) Changes in patterns of consumer spending
Technical advances(loss of jobs) Changes in level of investments
Unexpected events(Wars)
Changes in what and how to produce.
These are any of the above
which will cause the economy
to spend money or lose money

8. 4 types of business cycles
• Kitchin cycle
Business cycles which last between 3-5 years
and are caused by businesses adapting their
inventory levels. (liquidity and liabilities)
JOSEPH KITCHIN

9. • Kuznets cycles
Business cycles which last between 15-20 years
and are caused by the changes in building and
construction industry.
Think what Medupi and Kusile shafts are causing for our
economy!!

10. • Jugler cycles
Business cycles which last between 7-11 years
and are caused by the changes in net
investments by business and government.

11. Kondratief cycles
Business cycle which usually lasts up to 50 years
and longer and are caused by technological
innovations, wars and discoveries of new
resources.
Think John D Rockefeller

12. The effects of this video on business
cycles???
Click the following link:
http://www.youtube.com/watch?v=mA63xWGPI-k
OR
http://video.search.yahoo.com/video/play?p=men+who+built+america&vid=4afe066d
76c320fbc3e917df4d1b5c1b&l=41%3A05&turl=http%3A%2F%2Fts4.mm.bing.net%
2Fth%3Fid%3DVN.607997580533500599%26pid%3D15.1&rurl=http%3A%2F%2Fw
ww.dailymotion.com%2Fvideo%2Fx17joxr_1-6-the-men-who-builtamerica_shortfilms&tit=1_6+The+Men+Who+Built+America&c=7&sigr=12htif44c&
sigt=10tct1hkm&ct=p&pstcat=politics&age=0&hsimp=yhsyhsifmclone1&hspart=Babylon&type=br112dm34bs01af121962&tt=b

13. COMPLETE ACTIVITY ON PAGE 36-37 IN YOUR
TEXTBOOK

14. Reference list.
J. Bantjes, M. M. (2013). The Business Cycle. In M. M. J.
Bantjes, Focus Economics Grade 12 (pp. 22-30). Cape Town:
Maskew Miller Longman.