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    Business Cycle

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    iamshijas
    The business cycle refers to the recurring and fluctuating levels of economic activity that an economy experiences over long periods of time. It includes four stages: boom, recession, bust, and recovery. While business cycles were once thought to be regular, they are now understood to be irregular in frequency, magnitude and duration. The business cycle has been studied for over 100 years and affects economies through periods of high and low unemployment, inflation, wages and consumer demand. It is characterized by cyclical and synchronous qualities, where downturns can spread from one industry to another across countries.

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    Business Cycle

    Uploaded by

    iamshijas
    150 views9 pages
    The business cycle refers to the recurring and fluctuating levels of economic activity that an economy experiences over long periods of time. It includes four stages: boom, recession, bust, and recovery. While business cycles were once thought to be regular, they are now understood to be irregular in frequency, magnitude and duration. The business cycle has been studied for over 100 years and affects economies through periods of high and low unemployment, inflation, wages and consumer demand. It is characterized by cyclical and synchronous qualities, where downturns can spread from one industry to another across countries.

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    Business Cycle

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    The business cycle refers to the recurring and fluctuating levels of economic activity that an economy experiences over long periods of time. It includes four stages: boom, recession, bust, and recovery. While business cycles were once thought to be regular, they are now understood to be irregular in frequency, magnitude and duration. The business cycle has been studied for over 100 years and affects economies through periods of high and low unemployment, inflation, wages and consumer demand. It is characterized by cyclical and synchronous qualities, where downturns can spread from one industry to another across countries.

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    Download as PPTX, PDF, TXT or read online from Scribd
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    150 views9 pages

    Business Cycle

    Uploaded by

    iamshijas
    The business cycle refers to the recurring and fluctuating levels of economic activity that an economy experiences over long periods of time. It includes four stages: boom, recession, bust, and recovery. While business cycles were once thought to be regular, they are now understood to be irregular in frequency, magnitude and duration. The business cycle has been studied for over 100 years and affects economies through periods of high and low unemployment, inflation, wages and consumer demand. It is characterized by cyclical and synchronous qualities, where downturns can spread from one industry to another across countries.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    of 9

    Definition of 'Business Cycle

    The recurring and fluctuating levels of economic activity


    that an economy experiences over a long period of time.
    The four stages of the business cycle Boom Recession Bust
    and Recovery. At one time, business cycles were thought
    to be extremely regular, with predictable durations, but
    today they are widely believed to be irregular, varying in
    frequency, magnitude and duration.
    The Business Cycle, also called the Economic or Trade
    Cycle, has been studied by economists for over 100 years..
    We all know of its effects. Sometimes the economy is
    booming are other times when economy is in recession.
    During times of boom unemployment is relatively low,
    wages are rising and inflation is also likely to be rising.
    During times of recession unemployment is relatively high,
    wages may be stagnant and inflation is likely to be low.
    The Four Phases of the Business Cycle
    Boom
    This phase is marked by low unemployment or even full
    employment in certain sectors of the economy, increasing
    interest rates, increasing inflation, high consumer demand,
    a balance of payments deficit and often a budget surplus
    for the government caused by high tax revenues and lower
    expenditure on Social Security.
    Recession
    During this phase we see increasing unemployment, falling
    demand from consumers, falling investment by firms and a
    decline in the levels of inflation and interest rates.
    Technically a recession happens when gross domestic
    product falls for two consecutive quarters.
    Bust
    The third phase is bust, the bottom of the business cycle.
    In this stage unemployment is relatively high, inflation is
    low, demand from consumers is low especially in regard
    to consumer durables (cars, fridges, washing machines
    etc.) and luxuries such as foreign holidays , there is very
    little investment by firms.
    Recovery
    The final phase is recovery, during this phase investment
    increases unemployment falls and consumers start to
    spend again. Doing the first part of recovery there is little
    inflation or pressure for increased wages but as we
    progress through recovery there will be inflation when
    there are shortages of labour, housing, capital etc,
    Characteristics of a Trade Cycle
    study of trade cycles has revealed two important characteristics: (1)
    Its cyclical nature, i.e., periodicity,
    (2) its general nature or synchronism.
    In this first place, it has been found that trade cycles occur
    periodically at fairly regular intervals.
    The interval is not a precise one but the degree of regularity is
    sufficient to demonstrate the periodicity of a trade cycle. There is a
    general consensus of opinion that the cycle takes seven to ten years
    nearly to complete itself.
    The second characteristic is synchronism. The business world is one
    a economic unit, like a living organism. An attack on one part of the
    business organism is bound to send shock to the other parts. If one
    firm is in grief ,those who deal with it cannot remain unaffected,
    and they in turn, will affect others with whom they may be in the
    commercial intercourse. Thus depression passes From one industry
    to another. A time comes when all industries in all districts and all
    firms in the country are engulfed . Few can escaped deluge.
    1.Synchronic
    2.Wave like movement
    3.Recurring nature
    4.Cumulative
    5.Pervasier
    6.Presence of crisis

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