The Business Cycle & Policy Response in France Coursework

The Business Cycle & Policy Response in France - Coursework mannequinIn 2000, France growth was close to 3%, its unemployment fell twice, and when compared to Europe it was a 1.5-percentage decline for France versus 0.7-percentage in Europe. The introduction of the single currency marked the period of rugged growth. From this, we conclude that, in the last twenty years, it is evident that the periods of falling unemployment always coincided with periods of strong economic growths (French Ministry of youth affairs, 20074). A fall in a countrys gross domestic product relates to contraction in the economy, when the country does not show any improvement in the GDP it may result in an economy time out. Reasons may be due to inflation, or massive unemployment in the country, a turn out in the GDP conforms to an expansion, stability of a country s currency, a peak relates to a continuous rise in the countrys GDP (Trading Economics.com, 20054).All forces of supply and demand affect busin ess cycle. The availability of capital does boost a healthy expansion a rise in the price of assets at this point leads to inflation, the stock market then rectifies this by creating fear and contraction(About.com, 20011). A rise in GDP signals an expansion in the business cycle whereas a fall in the GDP signals a contraction. Reports show that the GDP of France expanded 1.6%in the second quarter of 2011. Historically France annual GDP growth was1.9% its highest observed in 1988 at 4.9%, a record low was -3.90% in march 2009. sound judgment the countrysstateat this point of the cycle, it will berighttosayFrances economy is incontraction.We look at France in 2009, where its GDP shrank by 1.2% in the first quarter, however, thiswas counteractedby a 3% in the third quarter, anotherfallwas recorded1.5% in the final quarter.Therecessionobserved when we see ii quarters of negative growth. In 2008 president, Nicholas Sarkozy gave a speech in Toulon he thought that there was the need to rethink theentireworlds financial system inconnectionto the economic crisis that the world faced. The president stated that what France was facing at that time was an economic recession and that it was a long problem. According to the latestdatathe French economy contracted, a 0.3% in the 2nd quarter in the year 2008, from thepreviousdata economists concluded that the two quarters recorded negative growths. These data raised fears of a further recession in the economy.This recession resulted in the rise in unemployment and a attemptin households to try to beat the recession (France 24, 20081). Wefurtherlook at thefiscalpolicy and how it functions in stabilizing theeconomicfluctuation. How this is asolutionto the recession problem?According to Weil,fiscalpolicy involves utilising of government