2. Group members:
Name Roll No
Pranav Shiyaniya 212
Shreyans Jain 213
Niraj Singh 214
Kumkum Sinha 215
Kavya Sisodiya 216
Diya Solanki 217
Harsh Solanki 218
Henshi Solanki 219
Isha Solanki 220
3.
4. Definition:
o Business cycle is the repetitive economic changes that take place
in country over a period.
o It is identified through the variation in the GDP along with the
other macroeconomics indexes.
5. o The business cycle refers to the natural fluctuations in economic
activity that occur over time, typically measured in terms of the rise
and fall of gross domestic product (GDP), employment, and other key
economic indicators.
o There are four stages in the business cycle: expansion, peak,
contraction, and trough.
6. Expansion
• During the expansion stage, the economy is growing,
and there is an increase in GDP, employment, and
income.
• This phase is typically characterized by low
unemployment rates, rising consumer confidence,
and a general sense of economic prosperity.
• The flow of money through the economy remains
healthy, cost of money is cheap because interest
rates are low.
7. Peak
• The peak marks the end of the expansion stage and
the beginning of the contraction stage.
• At this point, the economy reaches its highest level
of output and employment.
• However, inflation and interest rates may also begin
to rise, signaling potential problems ahead.
• Peak growth typically creates some imbalances in the
economy that need to be corrected.
8. Contraction
• During the contraction stage, the economy begins to
slow down, and there is a decline in GDP,
employment, and income.
• This phase is characterized by rising unemployment
rates, falling consumer confidence, and a general
sense of economic hardship.
• As demand begins to fall, businesses may not
immediately adjust production level leading to the
over-saturated markets with surplus supply and
exacerbating the downward movement in prices.
9. Trough
• The trough marks the end of the contraction stage
and the beginning of the expansion stage.
• At this point, the economy has hit bottom and is
ready to start growing again.
• However like the peak, the low point of the cycle
provides an opportunity for individuals and business
to reconfigure their finances in anticipation of a
recovery.
10.
11. Consequences
• The consequences of the business cycle can be
significant.
• During the expansion stage, businesses may invest
heavily in new equipment and technology, leading to
increased productivity and economic growth.
• However, during the contraction stage, businesses
may cut back on investment, leading to decreased
productivity and economic slowdown.
12. Consequences
• Unemployment rates also tend to rise during the
contraction stage, as companies lay off workers to
reduce costs.
• This can lead to a decline in consumer spending,
which further exacerbates the economic slowdown.
13. Consequences
• Governments and central banks can take various
actions to mitigate the effects of the business cycle,
such as increasing or decreasing interest rates,
adjusting fiscal policy, and implementing stimulus
programs.
• By carefully managing the economy, policymakers
can smooth out the business cycle and promote long-
term economic growth and stability.
14. Conclusion
• In conclusion, the business cycle is a
fundamental concept in macroeconomics that
describes the natural fluctuations in economic
activity that occur over time.
