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Business cycle final ppt
- 1. PRESENTATION ON BUSINESS CYCLE Submittedto:- Ms. Avneet Kaur Group members:- Shanu Ranjan Shiv Sunder Barik Saumya Garg Shikha Singh Disha Bansal
- 2. INTRODUCTION Definition:- Thebusiness cycle is the periodic but irregular up-and-down movement in economic activity, measured by fluctuations in real gross domestic product (GDP) and other macroeconomic variables. They don’t have any fixed rhythm , but they are the cycles in the phases of contraction and expansion that recur frequently and in fairly similar pattern.
- 3. FEATURES OF BUSINESSCYCLES Wave like movement : Wavelike movement of business cycles , featured by phases of expansion( prosperity ) and contraction (depression ) Repetitive fluctuations: they are repetitive and rhythmic in nature , period of prosperity is followed by period of depression which is again followed by a period of prosperity
- 4. Alternating forces: forces of prosperity , depression and growth are in built in the system , each forces will itself create a space for the next force to occur Lack of symmetry : peak , depression etc are not symmetrical in nature , the expansion phase is slow and gradual where as the period of contraction is sudden and violent
- 5. Economy widephenomenon : It may start from industrial sector, but it will gradually move to other sectors of the economy. Self reinforcing : Once the cycles are start on itself, it tends to feed on itself. No fixed time interval : Business cycles are differ in time , it may last for 2 to 4 years , other can last for 8 to 10 years or even more.
- 6. DIFFERENT PHASES OFBUSINESS CYCLE Expansion :-increased consumer confidence, which translates into higher levels of business activity. It consists of three small stages : 1.Recovery 2.Boom 3.Peak
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- 8. 1.Recovery The turningpoint from depression to expansion is termed as Recovery or Revival Phase. Consumer’s confidence starts to increase. Rise in economic activities. Higher level of output and trade. Higher level of effective demand. Larger expansion of bank credit. Heavy investment on capital goods.
- 9. 2.Boom Consumer’s confidencestarts to increase at a faster pace. Unemployment levels fall. Business starts increase their construction levels. Rise in National Income. Rapid increase in economy. Inflation increase at very high rates.
- 10. 3.Peak The economyhas reached its peak. Output starts to standstill and level off. Consumer’s confidence starts to decline. People start to stop their buying. Number of jobs exceed the no of workers in the market , over full employment Boom in itself carries the seed of self destruction in it , bottle necks began to emerge in the economy
- 11. Contraction It is aperiod of decrease in consumer confidence and economic activity. It consists of three smaller stages: Recession Depression Trough
- 13. 1.Recession Recession isa period of reduced economic activity in which levels of buying, selling, production, and employment typically diminish. Consumer’s confidence starts to decrease a little. Unemployment is increasing while inflation is dropping. Failure of some business create panic in market .
- 14. 2.Depression Depression isthe most fearful stage of a trade cycle. The phase of depression (also called slump) is characterized by low economic activities. Rapid decline in general output and employment. General price level falls. Level of unemployment rises. Most of the firms are incurring losses. Interest , wages and rent are all falling. Bank credits contracts.
- 15. 3.Trough Contraction reachesa minimum, or Economy hits bottom. Output starts to standstill and level off. Consumer’s confidence starts to level off. End of recession, growth resumes.
- 16. CAUSES OF BUSINESSCYCLES Expansion and contraction of loans by banks : A change in the bank credit will create business cycles, when banks expand credit it will result in inflation or boom in the economy , vice versa will result in downfall of the economy.
- 17. Change inthe volume of investments : Fluctuations in the volume of trade cycles effect the capital invested and there by the pattern of economy movement . Seasonal fluctuations : Seasonal fluctuations affect agricultural sector and hence entire economy.
- 18. Under consumptionor excessive savings: Basic cause of business cycles is under consumption or excessive savings by household sector. Excessive savings result in higher investments resulting in prosperity in economy.
- 19. Lack ofadjustments between demand and supply : If demand is more than supply , it will cause inflation. If supply is more than demand it will cause depression.
- 20. Feelings ofentrepreneur: Optimism will cause prosperity in the economy where as, Pessimism will create depression in the economy. Other factors : Rate of growth of population , revolutions, discoveries of new resources etc.
- 21. MEASURES TO CONTROLBUSINESS CYCLES Fiscal policy measures. Monetary policy measures. Non fiscal and non monetary measures.
- 22. REFERENCES Dwivedi, DN(2015), Managerial Economics (8th ed),India: vikas publishing house pvt. Ltd. Mithani, D M (2013), Managerial Economics:Theory & Application(7th ed.), India: Himalaya Publishing House Thomas, Christopher R and Maurice, s Charles (2008), Managerial Economics :concepts & Application (7th ed.), India: Mc Graw hill Irwin Kumar Raj and Gupta Kuldip(2005), Managerial Economics, India:UDH publishers & Distributors Ahuja, H L (2017), Managerial Economics:Analysis of Managerial Decision Making(9th ed.), India: S chand Company Ltd. Geetika(2017), Managerial Economics(3rd ed.), India: Tata Mc Graw Hill Education Pvt Ltd. http://www.economicsdiscussion.net/business-cycles/business-cycles- meaning-phases-and-features/10413 THANK YOU