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Business cycle
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Business cycle

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    Business cycle Business cycle Presentation Transcript

    • SSCYCLE Rohan Solanki Nikita Goud Umar Khan Nikhat Rajput Prabhu Hosmani Afreen Shaikh
    • What is a Business Cycle? The term business cycle refers to the recurrent ups and downs in the level of economic activity, which extend over several years. Definition: alternating increases and decreases in the level of business activity of varying amplitude and length.
    •  How do we measure “increases and decreases in business activity?”  Percent change in real GDP. Why do we say “varying amplitude and length?”  Some downturns are mild and some are severe, whereas,  Some are short (a few months) and some are long (over a year). Do not confuse with seasonal fluctuations!
    • Periods of Business Cycle The Short Kitchin Cycle (40 months). The Long Jugler Cycle (9 ½ years). The Very Long Kondratieff Cycle (50 years). Building Cycle (18 years). Kuznets Cycle (16-20 years).
    • Business Cycle : Diagram Expansion Recession Expansion PeakTotal Output Secular growth trend Trough 0
    • Characteristics : PeakPhase  Real output in the economy is at a high level.  Unemployment is low.  Domestic output may be at its capacity.  Inflation may be high.
    • Characteristics : Contraction orRecession Phase. Real output is decreasing. Unemployment rate is rising. As contraction continues, inflation pressure fades. If the recession is prolonged, price may decline (deflation). The government determinant for a recession is two consecutive quarters of declining
    • Characteristics : Trough orDepression Phase Lowest point of real GDP. Output and unemployment “bottom out” This phase may be short-lived or prolonged. There is no precise decline in output at which a serious recession becomes a depression.
    • Characteristics : Expansion orRecovery Phase Real output in the economy is increasing. Unemployment rate is declining. The upswing part of the cycle.
    • Business Cycle : PEPSICo. India
    • Growth Phase – Boom Phase Launched in India in 1988 Consistent Growth. Waves of optimism. Highest point of Expansion. Rise in profits, investment, sales, employment etc.
    • Expansion R ET A IL M A R K ET S H A R E O F B EV ER A G E P R O D U C T S Sports Drinks Teas 2% Bottled W ater 3% 13% Fruit Drinks 16% Colas 66%
    • Recession Uncertain downfall. Controversies.Outcome- Decline in profits, sales etc.
    • Revival Turning point from depression into expansion. A result of New Innovation.
    • SWOT of PEPSICo. S- Strong brand name, corporate identity, Global distribution, New innovations. W- Health Issues, misleading advertisements. O- Growing demand, Expansion into new markets, faster growth. T- Competition from coke, legislation health scares like France and Belgium.
    • To conclude… As we have seen, a business cycle describes the phases of growth and decline in an economy. The goal of an economic policy is to keep the economy in a healthy growth rate -- fast enough to create jobs for everyone who wants one, but slow enough to avoid inflation. Unfortunately, life is not so simple. Many factors can cause an economy to spin out of control, or settle into depression. The most important, over-riding factor is confidence –  Of investors, consumers, businesses and politicians. The economy grows when there is confidence in the future and in policymakers, and does the opposite when confidence drops. So a business cycle plays an important role in