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Business Angela Emma Rudd BMA

External influences

The Business Cycle
All countries suffer fluctuations in the level of activity within their economies. At
times spending, output and employment all rise during other periods the opposite is

A nation's Gross Domestic Product (GDP) measures the value of a countries output…

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Business Angela Emma Rudd BMA

stand still or even fall and the amount of spare capacity rises. Some businesses fail
and the level of bankruptcies are also likely to rise.

A slump often, but not always, follows a recession. In some circumstances, an
economy may enter the upswing stage…

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Business Angela Emma Rudd BMA

Rate of inflation Firms face increasing
increases pressure to increase
Boom Bottlenecks in supply prices
of materials and Businesses seek
components alternative methods to
Some firms unable to increase output.
satisfy demand Wage rises offered to
Profits probably high, retain or attract skilled
but hi…

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Business Angela Emma Rudd BMA

A boom may result in governments raising interest rates in an attempt to lower the
level of economic activity. Higher interest rates are likely to discourage investment
by businesses and spending by consumers. Reducing spending in this way can assist in
avoiding resources becoming too…


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