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Economics Business Cycle

The document discusses the business cycle, which refers to fluctuations in economic activity over time as measured by changes in GDP. It notes that business cycles are characterized by occurring periodically across all economic sectors in complex and non-uniform ways. The phases of a business cycle are expansion, peak, recession, depression, trough, and recovery.

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Yandex Prithu
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180 views12 pages

Economics Business Cycle

The document discusses the business cycle, which refers to fluctuations in economic activity over time as measured by changes in GDP. It notes that business cycles are characterized by occurring periodically across all economic sectors in complex and non-uniform ways. The phases of a business cycle are expansion, peak, recession, depression, trough, and recovery.

Uploaded by

Yandex Prithu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

Business Cycle

By:
Susmit Saha
Uday Dalvi
Contents

 Meaning of business cycle

 Characteristics of business cycle

 Phases of Business cycle


What Is a Business Cycle?

 Business cycles are fluctuations in economic activity that an economy experiences

over a period of time

 Generally measured using the rise and fall in the real gross domestic product

(GDP)

 The common or popular usage boom-and-bust cycle refers to fluctuations in which

the expansion is rapid and the contraction severe


Characteristics of Business Cycle

 Occur Periodically:

 These phases occur from time to time

 Their duration may vary from anywhere between two to ten or even twelve years

 They are Synchronic:

 Business cycles are not limited to one firm or one industry

 They originate in the free economy and are pervasive in nature


Characteristics of Business Cycle

 All Sectors are Affected:

 All major sectors of the economy will face the adverse effects of a business cycle

 Complex Phenomenon:

 They do not have any uniformity

 There are no set causes for business cycles as well


Phases of Business Cycle

1. Expansion

2. Peak

3. Recession

4. Depression

5. Trough

6. Recovery
Phases of Business Cycle

1. Expansion:
 When the expansion occurs, there is an increase in employment, incomes, production, and
sales

 The economy has a steady flow in the money supply and investment is booming

2. Peak:
 The second stage is a peak when the economy reaches the maximum level of growth

 Prices hit their highest level, and economic indicators stop growing
Phases of Business Cycle

3. Recession:
 These are periods of contraction

 During a recession, unemployment rises, production slows down, sales start to drop because
of a decline in demand, and incomes become stagnant or decline

4. Depression:
 Economic growth continues to drop while unemployment rises and production plummets

 Consumer confidence and investment levels also drop


Phases of Business Cycle

5. Trough:
 This period marks the end of the depression, leading an economy into the next step: recovery

6. Recovery:
 The economy starts to turn around

 Low prices spur an increase in demand, employment and production start to rise, and lenders
start to open up their credit coffers

 This stage marks the end of one business cycle

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