The recession's unexpected winners

Read this article that covers some businesses that are doing well in the current economic crisis.

Level 1: Knowledge
1) Define the term deflation. According to the article, what is the main problem with deflation?

Level 2: Application
2) Explain the term ‘price elasticity of demand’ using a product indentified in this article ..

Level 3: Analysis
3) Analyse the impact of the external business environment on the business strategy for ‘John Lewis’

Level 4: Evaluation
4) Define the term ‘recession’ Recommend a recession management strategy for an LCD TV screen producer. Hint – this may be useful

Stuck? Click here for some ideas!


Note Level 1 – Level 4 are questions based on IB standards where

Level 1: Knowledge
Level 2: Application
Level 3: Analysis
Level 4: Evaluation

Words in bold (define, explain…) have a specific meaning in the IB Diploma Program (DP). The meanings are in Glossary of Command Terms Section of the IBO DP Business and Management Guide available at the OCC and from my website

Hong Kong is now in recession

This article from the BBC confirms that Hong Kong is now 'officially' in recesssion.

While there is no official dfinition for the word recession, it is usually meant to define a period of two consecutive quarters of negative economic growth - that is 2 quarters of falling GDP (Gross Domestic Product).

Oct 2008 - Is the UK in recession?

This is a nice short article from bized.co.uk on the threat of recession in the UK. People use the term loosely, but based on the generally accepted economist’s definition of recession, the UK right now (Oct 2008) is NOT in recession. However, the article states that the UK is almost certainly going to be in recession in very soon.

Read the article and answer the following questions

Q1) By how much did GDP increase or decrease by
a) In the 2nd quarter 2008
b) In the 3rd quarter 2008

Q2) What is expected to happen to UK GDP in the 4th quarter 2008

Q3) What is the generally accepted definition of the word ‘recession’

Q4) What does a ‘negative period of economic growth’ actually mean for an economy?

Q5) What does the article tell us about economic activity in the primary, secondary, and tertiary sectors?

Q6) What does the information in the article about GDP have to do with this statement in the article?
The news had a bad effect on share prices and on the value of the pound, which fell to $1.53 having been at around $2 in the summer.
(Hint – it will be best to answer by describing a) the effect on share prices and b) the effect on the value of the pound separately using suitable diagrams