Question

list three of the key business cycle facts and explain their significance

Answer 1

Employment- The business cycle has major consequences for the overall level of the economy's employment. Employment continues to be strong during times of economic success and development, as firms require more employees to satisfy demand and increase their businesses. On the other hand, economic downturns and recessions tend to be characterized by rising unemployment, cuts in working hours and cuts in salaries for workers.

Consumer Demand- One of the main reasons business cycle is important for businesses is that it can have a major impact on consumer demand. High levels of unemployment and underemployment mean that consumers have less money to spend on products and services, which tends to cut demand from consumers. Small customer demand leads to poorer company revenue, which shrinks revenues and raises the chances of losses sustained. Companies suffering sustained losses could be forced out of the market.

Surviving business cycles- Surmounting economic downturns and recessions is one of the biggest long-term sustainability challenges for a business. Conditions are ripe for new enterprises to enter the market during economic recoveries and booms, but downturns and recessions usually result in the smashing of small businesses. Surviving the slow economic cycles usually revolves around cost management, improved productivity, and capital conservation during boom times.