Business Studies – 6.1.1 Business cycle | e-Consult

A boom is a period of strong economic growth, characterized by rising GDP, low unemployment, and increased consumer confidence. Conversely, a slump is a severe and prolonged downturn, often occurring within a recession, marked by falling GDP, high unemployment, and decreased consumer spending.

During a boom, business activity typically increases. For example, capital expenditure (investment in new equipment, buildings, etc.) would likely increase as businesses are optimistic about future demand and profitability. During a slump, business activity typically decreases. For example, research and development (R&D) spending might decrease as businesses focus on cost-cutting and survival rather than innovation. Also, expenditure on advertising and marketing might be reduced during a slump.