Unit 3.1 · Measuring Economic Activity and Illustrating Its Variations
Business Cycle
AO2AO4Diagram required
Syllabus Requirement
Shows short-term fluctuations (booms/recessions) and long-term growth trend (potential output) in real GDP.
Assessment Objectives
AO2Application and Analysis
AO4Use of Appropriate Skills
Summary
The business cycle illustrates the fluctuations in economic activity within a country over time, highlighting phases such as expansion, peak, contraction, and trough. Understanding these phases is important for analyzing economic trends and making informed decisions in macroeconomics.