SCHOOL OF FOREIGN LANGUAGES FOR ECONOMICS

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Phrase of Business / Economic Cycle
 Expansion or boom or
Upswing of economy

From prosperity to recession

Contraction or
Downswing of economy
RECOVERY PHRASE
EXPANSION PHRASE
BOOM (PEAK) PHRASE
RECESSION PHRASE
QUATITIES OF PHARSES OF BUSINESS CYCLE
INTERNAL AND EXTERNAL THEORIES OF BUSINESS CYCLE
Business cycle is a regular cycle. It is a natural law, automatically
self- generating and automatically end. The business cycle
depends on the market economy.
 Joseph Schumpeter (1883-1950)
The business cycle has the external theories because these
causes are direct impacts on business cycle. It makes a rise
or fall in the demand and supply on the market
 WHY WAS THERE THE KEYNESIAN THEORY?
Keynesian theory is central to understanding the Great Depression
THE CONTENT OF THE KEYNESIAN THEORY

According to Keynesianism, the state can

stimulate economic growth and improve
stability in the private sector - through, for
example, interest rates, taxation and public
projects.
 THE CONTENT OF THE KEYNESIAN THEORY

"Keynesianism," is based on government intervention in the economy to help

create demand. Through fiscal and monetary policies, a business cycle can be
mildly controlled and reduce the chances of a recession.
To push demand, the Keynesian model relies on three policy levers:
1) Increase Government Spending ("G")
2) Increase Money Supply ("M")
3) Lower Taxes ("T")
WHERE KEYNES WENT WRONG?
 WHY KEYNES WENT WRONG?
If there is an increase in AD, firms pay
higher wages to workers in order to
increase in output; this increase in
nominal wages encourage workers to
supply more labor and therefore
unemployment falls.
The increase in AD also causes inflation
to increase, and therefore real wages do
not actually increase but remain the
same. Later workers realize that the
increase in wages was only nominal and
not a real increase. Therefore, the supply
of labor falls and unemployment returns
to its original or Natural rate of
unemployment. It is only possible to
reduce unemployment by causing an
increase in the rate of inflation.
MILTON FRIEDMAN (1912-2006)
Bui My Ngoc (MBA)
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 downturn
upturn
expectations
consumption

balance of payment

Gross Domestic Product (GDP)

demand
supply
save
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 GDP downturn

upturn

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 balance of payments

save

consumption
expectations
demand

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 supply

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 the demand for goods
and services declines.
economic
times are good and they feel confident
about the future.
they are afraid
of losing their jobs/ becoming unemployed.
people have to pay
more on their mortgage or rent (and so
consume less)
consumption is
increasing.
innovations
destroy established companies or industries.

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 C A B E D G F

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boost - stimulate output-production boom-depression
decrease - reduce recovery-upturn contract - expand
depression - slump demand - supply
excess - surplus endogenous - exogenous
expand - grow peak -trough
expenditure - spending save - spend

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That the business cycle and inflation had ended,
and there was now consistent economic growth.

No; he says there’s still the potential of both inflation

and a downturn in the economy

Increased spending and consumption when people have positive expectations,

and when their assets, particularly the price of their house are increasing.
Depression occur when people start saving more and consuming less, when
credit is no longer available, and assets decline in value.

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 downturn
manipulate balances deficits
booming recession

expenditure

harmful

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Ironing out here means to try to flatten the
business cycle, to make its upward and
downward swings smaller. More generally,
to iron out means to solve problem or find
solutions.

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D

Bui My Ngoc (MBA)

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C

Bui My Ngoc (MBA)

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B

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 C A B E F G D

Bui My Ngoc (MBA)

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Bui My Ngoc (MBA)
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Th.S BÙI MỸ NGỌC
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