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Table of Contents

  1. Topic pack - Macroeconomics - introduction
  2. 2.1 The level of overall economic activity (notes)
  3. 2.1 The level of overall economic activity (questions)
  4. Section 2.2 Aggregate demand and supply (notes)
  5. Section 2.2 Aggregate demand and supply (simulations and activities)
  6. 2.2 Aggregate Demand and Aggregate Supply (questions)
  7. 2.3 Macroeconomic objectives (notes)
  8. Low Unemployment
    1. Low Unemployment
    2. What the data says
    3. The meaning of unemployment
    4. Case study - regional variation
    5. Consequences of unemployment
    6. Case study - tougher for men
    7. Types and causes of unemployment
    8. Disequilibrium unemployment
    9. Equilibrium unemployment
    10. Policies to reduce unemployment
    11. Low and stable inflation
    12. Low and stable inflation (notes)
    13. The meaning and measurement of inflation
    14. A consumer price index
    15. Finding out more about consumer price index weights
    16. Problems with measuring inflation
    17. Inflation - videos
    18. Consequences of inflation
    19. Hyperinflation
    20. The consequences of deflation
    21. Types and causes of inflation: demand-pull inflation
    22. Types and causes of inflation: cost-push inflation
    23. Case Study - car prices in Trinidad
    24. Possible relationships between unemployment and inflation
    25. PlotIT - Phillips curve
    26. Phillips curve - long-run
    27. Natural rate of unemployment
    28. NAIRU
    29. Economic growth
    30. Economic growth (notes)
    31. Causes of economic growth
    32. Economic growth and the PPF (1)
    33. Economic growth and the PPF (2)
    34. Economic growth and the business cycle
    35. Economic growth and the aggregate supply curve
    36. Consequences of economic growth
    37. Equity in the distribution of income
    38. Equity in the distribution of income (notes)
    39. Indicators of income equity
    40. Poverty
    41. The poverty line: An Indicator of Relative poverty
    42. The causes of poverty
    43. The role of taxation in promoting equity
    44. The role of taxation in promoting equity (notes)
    45. Other methods of promoting equity
  9. 2.3 Macroeconomic objectives (questions)
  10. 2.4 Fiscal policy (notes)
  11. 2.4 Fiscal policy (questions)
  12. 2.5 Monetary policy (notes)
  13. 2.5 Monetary Policy (questions)
  14. Section 2.6 Supply-side policies (notes)
  15. 2.6 Supply-side policies (questions)
  16. Print View

Economic growth and the business cycle

Remember, economic activity is measured by GDP and is prone to short term cyclical fluctuations (See Page 33 for Business Cycle and Page 20 for GDP). This was referred to as the of business cycle or trade cycle. The diagram below shows the various stages of the trade cycle and can also be used to illustrate whether an economy is experiencing long term economic growth. To observe this look at the trend line. If the trend shows GDP increasing over time, then the economy will be experiencing economic growth. The trend line can also slope downwards, in which case the economy is experiencing economic decline or negative economic growth.

S:\triplea_resources\DP_topic_packs\economics\student_topic_packs\media_macroeconomics\images\trade_cycle_up_trend.gifEconomic Growth

S:\triplea_resources\DP_topic_packs\economics\student_topic_packs\media_macroeconomics\images\trade_cycle_down_trend.gifEconomic Decline

Economic growth - what the data says


Identify the levels of GDP per capita in your country by accessing the World Bank Catalogue though this link.

  • Choose the World Development Data set
  • Click on Indicators
  • Type the term 'GDP per capita' into the search engine.
  • Save the GDP per capita data in a spreadsheet
  • plot the data over a 20 year period using a graph
  • try to draw a trend line
  • if you have managed to establish a trend line - is this upward, or downward sloping?


1. Describe the data you have plotted. Identify whether there is evidence of a business or trade cycle.

Repeat the exercise for two other countries from different continents.

2. Identify similarities and differences between the three sets of GDP data.

3. Analyse the factors that might account for the similarities and differences you have identified. (You may want to revisit this answer once you have completed this section).