Text 2. Business cycles

Business cycles can be described as periods of boom, contraction, recession and expansion.

Boom. At the peak of the business cycle the economy is booming. Business is producing at or near capacity, and those looking for work can generally find jobs.

During peak times, business investment and consumer spending are at very high levels. But because the economy is at or near full employment and the demand for goods and services is increasing, prices are also increasing. This sets the stage for the next phase of the business cycle.

Contraction. For any number of reasons, consumers and busi­nesses begin to reduce their spending levels. Businesses may lay off workers, reduce their purchases of raw materials and reduce production because they have built up excess inventories. Some businesses may decide to continue to use old factories and equipment rather than investing in new machines and buildings.

Whatever the reason, reductions in business and consumer spending mark the begin­ning of a contraction in the business cycle. With the reduction in spending, other business firms begin to cut back their activities. Their production is reduced and more workers are laid off. Because of the layoffs, workers, who are also consumers, spend less. This leads to still more reductions in production and additional worker layoffs.

Recession. With factories operating at less than capacity and unemployment at very high levels, total output of goods and services enters a long-term decline. This is the bottom phase of the business cycle, the period of recession.

Times are hard during recessions. Unemployment is very high, jobs are difficult to find and many businesses fail. A very severe and long-lasting recession is called a «depression».

Expansion. After a period of recession the economy eventually begins to recover, entering the expansion phase of the business cycle. During a period of expan­sion, business and con­sumer spending begins to increase.

Sensing that conditions are about to improve, business begins to expand its activities. Unemployment declines as additional workers are hired. This, in turn, leads to higher levels of consumer spending and still further expansion of employment, output and consumption.

Text 3. From a manufacturer to a large retailer

MODERN

PLASTICS LTD.

Manufacturers of Plasticware

Melox House

PORTSMOUTH

12 January 20 . .

Messrs. L. Thompson & Son

24 Beachview Avenue

Liverpool

Dear Sirs,

We are very pleased to have your enquiry, and are enclosing the price-list you requested, together with our terms of sale.

As you have evidently realized, plastic kitchenware is here to stay - it has already ousted heavy and expendable metal, glass and china from the modern kitchen. Dealers who have displayed our brightly coloured range have reported good sales even in the present season, when hardware sales are usually at their lowest.

After studying our prices and our liberal terms to the trade, you will understand why we are working to capacity to meet the demand. We would advise you, therefore, to let us have your order by the end of the month, as this will enable you to have stocks of our attractive lines by Easter.

We look forward to the opportunity of being of service to you.

Yours faithfully,

p.p. MODERN PLASTICS LTD.

R. B. Gordon

Sales Manager