An Uncertain Future?

An Uncertain Future?

Uncertainty: Means that a range of possible future outcomes exists, but we don't know which one will actually happen.

Risk: Requires knowing the probability of each of the possible outcomes and the impacts of each one.

Risk averse: Reluctant to take chances and inclined to "play safe"

Economic Cycle:

• The tendency of national or global economic activity to fluctuate between upswing, boom, downturn and recession.

GDP:

• Gross Domestic Product.
• main measure of national income
• It is the market value of the goods and services produced in a country in a given time period

State of Economy:

Boom:

• A time of rapid economic growth
• low unemployment
• Rising inflation
• Increased consumption
• Increased consumer confidence

Downturn:

• Consumers are less confident= Fall in aggregate demand, as they spend less
• When sales are slow, businesses will cut output
• In 2008, the downturn came when mortgages were hard to obtain, cutting demand for housing, which had a knock on effect for the construction industry.

Recession:

• 2 or more successive quarters in the economic cycle in which GDP is falling
• Firms will cut output
• Cause uncertainty for the business
• Depreciation of machinery

Recovery:

• Depreciation will eventually lead to businesses investing in new machinery
• Governments can also have positive impacts
• Technological breakthrough
• Rise in…