causes of chnages in the economic cycle
Macro Economic Growth
- Created by: tahliarose
- Created on: 04-01-18 12:20
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- fluctuations in AD
- Keynes argued that recessions are caused by fluctuations in AD caused by business and consumer confidence
- causes of changes in the phases of the economic cycle
- political interference
- a governing party may attempt to engineer a boom to win an election
- speculative bubbles
- when asset prices such as houses/shares rise and then start to fall as people sell them and the resultant impact on confidence
- supply side factors
- changes on the supply side such as changes in technology can cause an economic cycle
- outside shocks hitting the economy
- these can be 'demand or supply side' and in some cases both. eg possible war or Brexit.
- changes in inventories
- when businesses run down their stocks if they overestimated demand.
- multiplier/acceleration interaction
- political interference
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