Economics for business and management PDF

Running head: ECONOMICS FOR BUSINESS AND MANAGEMENT
Economics for Business and Management
Name of the Student
Name of the University
Author Note

1ECONOMICS FOR BUSINESS AND MANAGEMENT
Table of Contents
Introduction:...............................................................................................................................2
Task a:........................................................................................................................................2
Task b:........................................................................................................................................4
Task c.........................................................................................................................................7
Conclusion:..............................................................................................................................10
References:...............................................................................................................................11

2ECONOMICS FOR BUSINESS AND MANAGEMENT
Introduction:
Real gross domestic product (GDP) represents an inflation-adjusted gross production
of the country for a particular time. To measure real GDP, value of all production in present
year is expressed in terms of a base year (Feldstein 2017). On the other side, business cycle is
a macroeconomic condition where economic growth increases or decreases over time. Hence,
this cycle indicates health of a country and this in turn helps the government to make
financial decisions. Based on the fluctuation of real GDP, it can be said that whether the
economy is experiencing recession or expansion. In general, business cycle has four phases,
which are contraction, trough, expansion and peak (Schumpeter 2017). Full employment
represents the situation when an economy uses its available labour force in an efficient way
(Schumpeter 2017). In this situation, both skilled and unskilled labourers receive job at
existing market wages. This in turn increases standard of living and per capital income of
people (McCombie and Thirlwall 2016).
Task a:
The following trend has represented fluctuation of real GDP for 18982 to 2018 for the
EU-15. These countries are Australia, Belgium, Finland, France, Denmark, Greece, Germany,
Italy, Ireland, the Netherlands, Luxembourg, Spain, Portugal and Sweden and the United
Kingdom.

3ECONOMICS FOR BUSINESS AND MANAGEMENT
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
-5
-4
-3
-2
-1
0
1
2
3
4
5
Real GDP
Figure 1: Trend of real GDP for the EU-15
The above figure has represents a trend line of real GDP for the EU-15 since 1982.
Based on the fluctuation of this line, it can be said that whether the economy of these
countries experience expansion or recession (Bloom et al. 2018). At the initial phase, the
value of real GDP has increased continuously between 1982 and 1988. In 1988, this curve
reached at a maximum level and has started to decline again. The sustainable period, during
which the value of real GDP increased continuously, expansion period, has occurred.
Therefore, all countries under the EU-15 experienced drastic economic growth during this
time. People received more employment opportunities while national income also increased.
Following this growth path, inflation also started to increase. On the other side, this real GDP
growth started to fall after 1988. During this period, recession occurred within those
countries. However, the adverse situation has occurred during the period of global financial
crisis. The financial crisis of 2007 gave drastic shock in these countries and consequently, the
value of real GDP reached to -4.4 in 2009. However, the government recovered this condition
successfully through implanting various fiscal as well as monetary policies.
This diagram represents that many people lost their jobs during this period of
financial crisis. Total production reduced drastically and people experienced a poor standard