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Chris Larham’s responses to a series of questions relating to the trade cycle [2001] can be opened in a print-friendly text document format here
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The Trade Cycle: Questions and Answers [2001]
1.) Under trade cycle characteristics, what do you expect to happen when the economy goes into recession?
- workers start saving money (disposable income stays the same)
- less money in economy
- fewer business start-ups
- interest rates are reduced
- increased business closures
- consumer demand for goods and services decrease
- low consumer confidence
- companies reduce output
- staff redundancy
- cancel capital investment
- reduce orders of supplies
2.) What are consumer durables?
- ‘big-ticket’ items
- ‘white goods’
3.) “Stock building during recovery and de-stocking in recession?”
- increasing stock levels in readiness for increased demand
- decreasing stock levels in readiness for decreased demand
4.) How should firms prepare for a recession?
- ensure liquidity is high and borrowings low to survive an unexpectedly bad year or so
5.)What have Governments tried to do in the ‘boom and bust’ economies?
- try to break the cycle; provide a more stable economy for businesses to operate in; improve business and consumer confidence; enable businesses to plan ahead with more accuracy – decreasing fluctuations in the economy
- a research group, Confederation of British Industry, measuring business confidence on a quarterly basis
7.) What is meant by a self-fulfilling prophecy?
- where your actions are governed by your intentions – prediction changes attitudes and actions
8.) Why would the Government wish to ‘talk up’ the economy during a recession?
- confidence produces a self-fulfilling prophecy – optimistic outlook increasing spending
Forty-year-old father of three wonderful children [William, Seth, and Alyssa]. Works as an Assistant Technical Officer in the Sterile Services Department of Treliske Hospital, Cornwall. Enjoys jogging, web design, learning programming languages, and supporting Arsenal FC. Obtained a BA degree in English from the University of Bolton in 2008, and has continued to gain qualifications in a diverse range of subjects thereafter.
