Task 2. Reading
Economic cycle.
A cycle is a repeating period of time. The term we use to describe how the
economy moves from good times to bad times and back again is business cycle.
The four stages of the business cycle are prosperity, recession, depression, and
recovery. Sometimes this series of stages is like a roller coaster. For a while,
everything seems to be going very well. Jobs are plentiful, and anyone who wants
to work can find a job. People feel good about the economy and are willing to
spend their money. Because people are buying, business is good. And when
business is good, we say we are enjoying prosperity, Prosperity is' the high point of
a business cycle. Sometimes it's called a boom. Employment is way up, the
demand for goods and services is high, and businesses are turning out goods and
services as fast as they can.
Sometimes the economy has problems, but not serious enough to cause real
alarm. If the demand for goods and services falls and unemployment rises, the
economy may be in a recession. Spending falls, so fewer goods and services are
demanded. We can measure a recession by the amount of drop in the gross
national product. Sometimes a recession is caused simply by either business or
consumers in general becoming worried about the economy. People may become
concerned about spending so much of their income. If they cut back on their
spending, demand for goods and services falls. Businesses may find that they have
expanded as much as they safely can. If many of them cut back on production, we
may experience a recession.
The lowest point a business cycle can reach is called a depression. In a
depression our gross national product also falls to its lowest point. Business is bad,
and unemployment is high.
Because they cannot find work and earn money, people cannot buy the good
and services they need. Because they cannot sell enough products to pay their
costs, businesses may be forced to close. And because businesses close, additional
people lose their jobs.
The final stage in a business cycle is called a recovery. During such a time, people
who have been out of work begin to find jobs. Consumers begin to buy more
products and services again. The gross national product, which is a measure of the
recovery, begins to rise again. The resources of the system, including people,
money, and capital goods, are used more fully. The business cycle is on an
upswing.
In many instances, a business cycle does not include the depression stage. It
may just go through the prosperity, recession, and recovery stages. A recession
does not have to lead to a depression
