The document discusses the business cycle and its four phases: peak, contraction/recession, trough, and recovery. It notes that business cycles vary in duration and intensity but all follow this general pattern. Key aspects of each phase are described, such as high output and unemployment during peaks and declining output and rising unemployment during recessions. Examples of post-World War II recessions in the US are provided to show how they differed in length and GDP decline. The Great Depression is discussed as an extreme example of a prolonged recession with very high unemployment.
The document summarizes the business cycle, which refers to recurring periods of economic expansion and contraction. It describes the four phases of the business cycle - peak, recession, trough, and recovery - and how indicators are used to monitor shifts between phases. Examples of past recessions in the US since 1950 are provided to show how they can vary in duration and severity. The Great Depression of the 1930s is discussed as the worst economic downturn in modern history.
The document summarizes the business cycle, which describes the typical fluctuations in economic activity between periods of growth (prosperity) and contraction (recession/depression). It discusses how the business cycle affected Canada's economy in the 1920s-1940s, including a period of post-WWI prosperity, followed by recession after the 1929 stock market crash, a long depression in the 1930s with high unemployment, and eventual recovery aided by increased production during WWII. The cycles influenced other countries through economic interdependence and have led to modern policies like unemployment insurance.
The document discusses the four phases of the business cycle: peak, recession, trough, and recovery. It provides characteristics of each phase, with a peak marking the highest point of economic expansion, a recession involving a decline in GDP for at least six months, a trough being the lowest point, and a recovery beginning an upturn. Recessions on average last around 11 months, while expansions typically last about 4 years.
This powerpoint describes the Business cycle of the United States economy. And includes a graphic repsentation of what the Business cycle looked like during the 1920s and Great Depression.
This document discusses business cycles and fluctuations. It notes that economies regularly experience periods of expansion/prosperity and contraction/recession. During expansions, investment, employment, output and incomes rise leading to economic growth. However, expansions cannot continue indefinitely and eventually reach a peak, after which a recession begins as demand falls. Recessions can deepen into depressions, with shrinking GDP, high unemployment and falling prices. Eventually, depressions bottom out and economic recovery begins, starting the business cycle again.
The document discusses highlights for 2012 including:
1) An upward bias for stocks in the range of 1,100 to 1,550 and low bias for interest rates in the first half of 2012, though headwinds and uncertainty may arise quickly.
2) 2012 will be a significant time of historical transformations as pressures build from unresolved issues like high global debt and political unrest, similar to the 1970s-1980s.
3) TSWM will maintain a well-thought-out asset allocation plan and conservative balance to mitigate emotional decision-making as volatility increases, relying on sound portfolio principles.
The document discusses mobile phone and internet usage statistics in India, noting that over 1.2 billion people live in India and 56% of the population uses a mobile phone, with more people accessing the internet through mobile than computers. It emphasizes that mobile is changing consumer behavior and interactions with brands, encouraging companies to develop a mobile strategy and optimize their mobile site for search and usability to better engage with customers on their constant mobile companion.
The document summarizes the business cycle, which refers to recurring periods of economic expansion and contraction. It describes the four phases of the business cycle - peak, recession, trough, and recovery - and how indicators are used to monitor shifts between phases. Examples of past recessions in the US since 1950 are provided to show how they can vary in duration and severity. The Great Depression of the 1930s is discussed as the worst economic downturn in modern history.
The document summarizes the business cycle, which describes the typical fluctuations in economic activity between periods of growth (prosperity) and contraction (recession/depression). It discusses how the business cycle affected Canada's economy in the 1920s-1940s, including a period of post-WWI prosperity, followed by recession after the 1929 stock market crash, a long depression in the 1930s with high unemployment, and eventual recovery aided by increased production during WWII. The cycles influenced other countries through economic interdependence and have led to modern policies like unemployment insurance.
The document discusses the four phases of the business cycle: peak, recession, trough, and recovery. It provides characteristics of each phase, with a peak marking the highest point of economic expansion, a recession involving a decline in GDP for at least six months, a trough being the lowest point, and a recovery beginning an upturn. Recessions on average last around 11 months, while expansions typically last about 4 years.
This powerpoint describes the Business cycle of the United States economy. And includes a graphic repsentation of what the Business cycle looked like during the 1920s and Great Depression.
This document discusses business cycles and fluctuations. It notes that economies regularly experience periods of expansion/prosperity and contraction/recession. During expansions, investment, employment, output and incomes rise leading to economic growth. However, expansions cannot continue indefinitely and eventually reach a peak, after which a recession begins as demand falls. Recessions can deepen into depressions, with shrinking GDP, high unemployment and falling prices. Eventually, depressions bottom out and economic recovery begins, starting the business cycle again.
The document discusses highlights for 2012 including:
1) An upward bias for stocks in the range of 1,100 to 1,550 and low bias for interest rates in the first half of 2012, though headwinds and uncertainty may arise quickly.
2) 2012 will be a significant time of historical transformations as pressures build from unresolved issues like high global debt and political unrest, similar to the 1970s-1980s.
3) TSWM will maintain a well-thought-out asset allocation plan and conservative balance to mitigate emotional decision-making as volatility increases, relying on sound portfolio principles.
The document discusses mobile phone and internet usage statistics in India, noting that over 1.2 billion people live in India and 56% of the population uses a mobile phone, with more people accessing the internet through mobile than computers. It emphasizes that mobile is changing consumer behavior and interactions with brands, encouraging companies to develop a mobile strategy and optimize their mobile site for search and usability to better engage with customers on their constant mobile companion.
The document discusses business cycles, which refer to the recurring periods of expansion and contraction in economic activity over several years. It defines a business cycle as alternating increases and decreases in business activity that vary in amplitude and length. It then provides details on measuring business activity, different cycle periods, a diagram of a typical business cycle, and characteristics of different phases like peaks, recessions, troughs, and expansions. The document concludes by discussing Pepsico India's business cycle and providing a SWOT analysis.
The business cycle refers to recurring periods of economic growth (expansion or prosperity phase) and contraction (recession phase) that occur over several years. There are four phases in the business cycle: peak, recession, trough, and recovery. During the peak phase, economic growth and activity are at their highest levels. The recession phase is a period of declining economic activity and rising unemployment. The trough marks the lowest point after which a recovery or expansion phase begins with renewed economic growth. Economists use indicators like unemployment claims and new orders to track and predict where the economy is in the business cycle.
The document discusses business cycles and the phases of recession, depression, recovery, and boom. It notes that since the 1940s, downturns have been less severe, the duration of business cycles has increased, and expansions have lasted longer than contractions on average. It also discusses leading and coincident economic indicators that can provide information about the current and future state of the business cycle. Procyclical variables like consumption move in the same direction as GDP, while countercyclical variables like unemployment move in the opposite direction.
This document is a presentation by Geeta Malik on the topic of trade cycles. It defines a trade cycle as recurring periods of economic prosperity and recession that can last for several years. The document outlines the meaning, nature, causes and phases of trade cycles. It discusses fluctuations in trade cycles and lists the phases as boom, recession, depression, and recovery. Causes mentioned include banking operations, shifts between capital and consumer goods, purchasing power, and human psychology. The document also briefly discusses the global depression of 1929-1932 and preventive and corrective measures that can be used to control trade cycles.
1. Describe all four phases of a business cycle. 2. Identify and des.pdfFashionBoutiquedelhi
1. Describe all four phases of a business cycle. 2. Identify and describe three most severe
recessions of the 20th century in the United States. 3. What will happen to unemployment and
inflation during a recession? Explain
Solution
Q1. The alternating periods of expansion and contraction in economic activity is referred to as
business cycles.
The duration of business cycle is not of same length. It varies from a minimum of two years to a
maximum of ten to twelve years. However, business cycles are repetitive and regular.
In some business cycles there are large swings away from the normal but in some swing is of
only moderate nature. It is the business cycles with large swings that create damage to the
economy.
Business Cycles are generally consists of four phases –
1. Expansion – It is also known as period of boom or prosperity
2. Peak – It is the upper turning point of the business cycle.
3. Contraction – It is also known as period of recession or downswing.
4. Trough – It is the lower turning point of the business cycle.
Expansion – In this phase, economy experiences an increase in both output and employment. Net
investment in positive manner occurs in the economy with demand for durable goods gather
momentum. Price level also rise during this phase generally on back of higher aggregate demand
as people are experiencing an increase in standard of living on back of high level of economic
activity.
Peak – This is the top point of the business cycle and where expansion phase comes to an end. At
this point, economy is producing its highest possible output given the resources. In other words,
economy is at its full employment level. Gap between potential real GDP and actual real GDP
becomes zero in this phase. Only natural rate of unemployment exists in this phase.
Contraction – This is the phase when economy starts experiencing a fall in output and
employment. There are many causes to this trend like reduction in credit availability, rise in price
of important natural resource or adverse impact on profit expectations or households and
businesses becoming pessimistic about economy. This phase is characterized by the rise in
unemployment. Net investment becomes negative and demand for durable goods declines rapidly
leading to creation of excess capacity in industries. Purchasing power of people falls on back of
lower economic activity.
Trough – This is the lowest point of business cycle. At this point production in economy is at its
lowest and unemployment is at its highest. Resources are left unutilized. Economy is producing
at under-employment level. Gap between potential real GDP and actual real GDP becomes
highest in this phase..
The document discusses business cycles, which refer to the recurring periods of expansion and contraction in economic activity over several years. It defines a business cycle as alternating increases and decreases in business activity that vary in amplitude and length. It then provides details on measuring business activity, different cycle periods, a diagram of a typical business cycle, and characteristics of different phases like peaks, recessions, troughs, and expansions. The document concludes by discussing Pepsico India's business cycle and providing a SWOT analysis.
The business cycle refers to recurring periods of economic growth (expansion or prosperity phase) and contraction (recession phase) that occur over several years. There are four phases in the business cycle: peak, recession, trough, and recovery. During the peak phase, economic growth and activity are at their highest levels. The recession phase is a period of declining economic activity and rising unemployment. The trough marks the lowest point after which a recovery or expansion phase begins with renewed economic growth. Economists use indicators like unemployment claims and new orders to track and predict where the economy is in the business cycle.
The document discusses business cycles and the phases of recession, depression, recovery, and boom. It notes that since the 1940s, downturns have been less severe, the duration of business cycles has increased, and expansions have lasted longer than contractions on average. It also discusses leading and coincident economic indicators that can provide information about the current and future state of the business cycle. Procyclical variables like consumption move in the same direction as GDP, while countercyclical variables like unemployment move in the opposite direction.
This document is a presentation by Geeta Malik on the topic of trade cycles. It defines a trade cycle as recurring periods of economic prosperity and recession that can last for several years. The document outlines the meaning, nature, causes and phases of trade cycles. It discusses fluctuations in trade cycles and lists the phases as boom, recession, depression, and recovery. Causes mentioned include banking operations, shifts between capital and consumer goods, purchasing power, and human psychology. The document also briefly discusses the global depression of 1929-1932 and preventive and corrective measures that can be used to control trade cycles.
1. Describe all four phases of a business cycle. 2. Identify and des.pdfFashionBoutiquedelhi
1. Describe all four phases of a business cycle. 2. Identify and describe three most severe
recessions of the 20th century in the United States. 3. What will happen to unemployment and
inflation during a recession? Explain
Solution
Q1. The alternating periods of expansion and contraction in economic activity is referred to as
business cycles.
The duration of business cycle is not of same length. It varies from a minimum of two years to a
maximum of ten to twelve years. However, business cycles are repetitive and regular.
In some business cycles there are large swings away from the normal but in some swing is of
only moderate nature. It is the business cycles with large swings that create damage to the
economy.
Business Cycles are generally consists of four phases –
1. Expansion – It is also known as period of boom or prosperity
2. Peak – It is the upper turning point of the business cycle.
3. Contraction – It is also known as period of recession or downswing.
4. Trough – It is the lower turning point of the business cycle.
Expansion – In this phase, economy experiences an increase in both output and employment. Net
investment in positive manner occurs in the economy with demand for durable goods gather
momentum. Price level also rise during this phase generally on back of higher aggregate demand
as people are experiencing an increase in standard of living on back of high level of economic
activity.
Peak – This is the top point of the business cycle and where expansion phase comes to an end. At
this point, economy is producing its highest possible output given the resources. In other words,
economy is at its full employment level. Gap between potential real GDP and actual real GDP
becomes zero in this phase. Only natural rate of unemployment exists in this phase.
Contraction – This is the phase when economy starts experiencing a fall in output and
employment. There are many causes to this trend like reduction in credit availability, rise in price
of important natural resource or adverse impact on profit expectations or households and
businesses becoming pessimistic about economy. This phase is characterized by the rise in
unemployment. Net investment becomes negative and demand for durable goods declines rapidly
leading to creation of excess capacity in industries. Purchasing power of people falls on back of
lower economic activity.
Trough – This is the lowest point of business cycle. At this point production in economy is at its
lowest and unemployment is at its highest. Resources are left unutilized. Economy is producing
at under-employment level. Gap between potential real GDP and actual real GDP becomes
highest in this phase..
1. Peak
ry
ve
co
Re
Trough
on
ion
ssi
ss
ce
ce
Re
Re
Peak
2. Business Cycles
√ The term business cycle refers
to the recurrent ups and downs in the
level of economic activity, which
extend over several years.
√ Individual business cycles may
vary greatly in duration and intensity.
√ All display a set of phases.
3. THE BUSINESS CYCLE
Phases of the Business Cycle
PEAK
RECESSION TROUGH RECOVERY
TH
OW D
Level of business activity
GR EN
TR
Time
4. Level of business activity
PEAK
H
WT
G RO ND
E
TR
Time
√ Peak or prosperity phase:
Real output in the economy is at a
high level
Unemployment is low
Domestic output may be at its
capacity
Inflation may be high.
5. Level of business activity
RECESSION H
WT
G RO ND
E
TR
Time
√ Contraction or recession 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 output.
6. TROUGH
Level of business activity
H
WT
G RO ND
E
TR
Time
√ Trough or depression 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.
7. Level of business activity
RECOVERY
H
WT
G RO ND
E
TR
Time
√ Expansionary or recovery:
Real output in the economy is increasing
Unemployment rate is declining
The upswing part of the cycle.
8. Business Cycle-one cycle through 4 phases
Real GDP
Peak
Peak
per year
ry
ve
Re
co
Re
ce
Re
ce
ss
ss
io
io
nn
Trough
One cycle Time
9. Recessions since 1950 show that duration and
depth are varied:
Period Duration in months Depth
(decline in real GDP)
1953-54 10 — 3.0%
1957-58 8 — 3.5%
1960-61 10 — 1.0%
1969-70 11 — 1.1%
1973-75 16 — 4.3%
1980 6 — 3.4%
1981-82 16 — 2.6%
1990-91 8 — 2.6%
2001 8 app. —3.3%
10. How Indicators Monitor the
Four Phases of the Business Cycle
• The Leading Indicator System
… provides a basis for monitoring the
tendency to move from one phase to the next.
…assesses the strengths and weaknesses in the
economy
… gives clues to a quickening or slowing of
future rates of economic growth
… indicates the cyclical turning points in
moving from the upward expansion to the downward
recession, and from the recession to the upward
recovery.
11. Causes of Fluctuations
Innovation
Political events
Random events
Wars
Level of consumer spending
Seasonal fluctuations
Cyclical Impacts — durable and non
durable
12. An Actual Business Cycle
An Actual Business Cycle
1981 --1990 ($ billion, 1992 dollars)
1981 1990 ($ billion, 1992 dollars)
Real GDP
6000 Peak
5200
Peak
4600
Trough
‘80 82 ‘85 ‘90
One Cycle
16. Global Depression, 1929-1932
Ave. Unemployment Rate, 1925-1928
Ave. Unemployment Rate, 1929-1933
Percent Decrease in Prices, 1929-1932
17. Six Million “Rosie the Riveters”
World War II Production of these items brought us out
of the Great Depression.
300,000 warplanes
124,000 ships
289,000 combat vehicles and tanks
36 billion yards of cotton goods
41 billion rounds of ammunition
2.4 million military trucks
111,527 tank guns and howitzers
•$288 billion was spent on the war,
•$100 billion in the first six months.
Unemployment hit an all-time low of 1.2%
and personal savings were 25.5%.