International biz cycle

[Nialllovespie]

Hiya,

What would be an impact of the international business cycle on a country other than Australia?

Thanks!

Nia

[iStudent]

The best example would be the GFC - as an example of a negative impact - a downturn in the global economy/international business cycle would cause downturn in a country other than Australia. This is accentuated by globalisation which encourages high levels of trade and financial flows - such that a recession in one country such as America leads to reduced imports, which directly leads to reduced exports in other countries such as China and a subsequent downturn in economic growth (AD = C + I + G + X - M).