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Phases of business cycle


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Phases of business cycle

  1. 1. PeakRecessionDepressionTroughRecoveryBoomPhases of BusinessCycle
  2. 2. Scheme of Presentation Introduction Different Phases of Business Cycleo Expansion• Recovery• Boom• Peako Contraction• Recession• Depression• Trough Factors That Shape Business Cycle
  3. 3. IntroductionDefinition:- The business cycle is the periodicbut irregular up-and-down movement ineconomic activity, measured by fluctuations inreal gross domestic product (GDP) and othermacroeconomic variables. How do we measure “up-and-downmovement in business activity ?”Percent change in real GDP
  4. 4. GDP-Real Growth Rate Of India
  5. 5. Different Phases of BusinessCycle Expansion :-increased consumerconfidence, which translates into higherlevels of business activity.It consists of three small stages :1.Recovery2.Boom3.Peak
  6. 6. 1.Recovery The turning point from depression toexpansion is termed as Recovery orRevival Phase. Consumer’s confidence starts toincrease. Rise in economic activities.
  7. 7. 2.Boom Consumer’s confidence starts to increase at afaster pace. Unemployment levels fall. Business starts increase their constructionlevels. Rise in National Income. Rapid increase in economy. Inflation increase at very high rates.
  8. 8. 3.Peak The economy has reached its peak. Output starts to standstill and level off. Consumer’s confidence starts to decline. People start to stop their buying. GDP begins to decline(bust).
  9. 9. • Contraction It is a period of decrease in consumerconfidence and economic activity. It consists of three smaller stages:• Recession• Depression• Trough
  10. 10. 1.Recession is a period of reduced economicactivity in which levels of buying,selling, production, and employmenttypically diminish. Consumer’s confidence starts todecrease a little. Unemployment is increasing whileinflation is dropping.
  11. 11. 2.Depression Depression is the most fearfulstage of a trade cycle. The phase of depression (alsocalled slump) is characterized bylow economic activities. Rapid decline in general outputand employment.
  12. 12. 3.Trough Contraction reaches a minimum, or Economy hits bottom. Output starts to standstill and level off. Consumer’s confidence starts to leveloff. End of recession, growth resumes.
  13. 13. Factors that shape businesscycle Volatility of investment spending Momentum Technological Innovations
  14. 14. Any Question ??
  15. 15. Thank You !!