Business cycle Managerial Economics

5,818 views

Published on

Published in: Technology, Economy & Finance
0 Comments
6 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
5,818
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
229
Comments
0
Likes
6
Embeds 0
No embeds

No notes for slide

Business cycle Managerial Economics

  1. 1. Business Cycle The term business cycle is referred to the recurrent ups and downs in the level of economic activity that extend over a period of time. The business fluctuations occur in aggregate variable such as national income, employment and price level. Business cycle is also called as “Trade Cycle” Business Cycle-Martin Thomas
  2. 2. 4 Phases of Business Cycle  Prosperity Phase : Expansion or Boom or Upswing of economy.  Recession Phase : from prosperity to recession (upper turning point).  Depression Phase : Contraction or Downswing of economy.  Recovery Phase : from depression to prosperity (lower turning Point). Business Cycle-Martin Thomas
  3. 3. Prosperity: Expansion & Peak When there is an expansion of output, income, employment, prices and profits, there is also a rise in the standard of living. This period is termed as Prosperity phase.  Rise in the national output & trade  Rise in consumer and capital expenditure  Rise in the Price of raw materials and finished goods  Rise in the level of income & employment Business Cycle-Martin Thomas Fig.1
  4. 4. Recession & Turning Point During a recession period, the economic activities slow down. When demand starts falling, the overproduction and future investment plans are also given up. There is a steady decline in the output, income, employment, prices and profits. Business Cycle-Martin Thomas
  5. 5. Depression & Trough When there is a continuous decrease of output, income, employment, prices and profits, there is a fall in the standard of living and depression sets in. During the phase of Depression:  The growth rate become negative  The level of national income and expenditure declines  Price of consumer and capital goods decline  Workers lose their job Business Cycle-Martin Thomas
  6. 6. Recovery Phase As the recovery gathers momentum, some firms plan additional investment; some undertake renovation programmes, and some undertake both. These activities generate construction activities in both consumer & capital goods sector. As a result more employment is generated and wage rates moving upward. Business Cycle-Martin Thomas
  7. 7. TROUGH Fig.2 Business Cycle-Martin Thomas
  8. 8. Fig.3 Business Cycle-Martin Thomas
  9. 9. Thank you… Business Cycle-Martin Thomas

×