Live revision! Join us for our free exam revision livestreams Watch now


Economic Boom

An economic boom is an often shirt-lived period of rapid growth of real GDP resulting in lower unemployment, accelerating inflation rate and rising asset prices. A boom occurs when real GDP is expanding much faster than the estimated trend rate of growth and this can lead macroeconomic overheating. Booms usually result in a positive output gap and rising demand-pull and cost-push inflationary pressures.

An economic boom is a period of rapid economic expansion, characterized by high levels of economic growth, low unemployment, and rising asset prices. Booms are typically associated with periods of technological innovation, increased consumer spending, and expansionary monetary policy.

Economic booms can have a number of positive effects, including:

  • Increased employment opportunities
  • Higher wages
  • Increased investment
  • Rising asset prices
  • Improved consumer confidence

However, booms can also lead to a number of negative effects, including:

  • Inflation
  • Asset bubbles
  • Overcrowding in housing and other markets
  • Increased inequality
  • Environmental degradation

Economic booms are typically followed by economic busts, as the economy adjusts to a new, lower level of economic activity.

© 2002-2024 Tutor2u Limited. Company Reg no: 04489574. VAT reg no 816865400.