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June 21st, 2017, 03:34 PM
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Join Date: Mar 2012
Re: Business Cycle MBA

As you want to know about Business Cycle Topic, so I am giving some information about it:

Details of Business Cycle:

DEFINITION OF BUSINESS CYCLE

With reference to the book of Samuelson “Business Cycle are economy-wide fluctuations in total national output, income and employment , usually lasting for a period of 2 to 10 years, marked by widespread expansion or contraction in most sectors of the economy.”

PHASES OF BUSINESS CYCLE

There are two main phases of Business cycle:
Recession
Expansion

And two turning points
Peaks
Trough

CHARACTERISTIC FEATURES OF BUSINESS CYCLE:

It occurs periodically: the fluctuations in economic activities occur periodically but not at a fixed period of interval.

It is wave like: the fluctuations indicate ups and downs in various economic indicators of a country.

The cycles will be similar but not identical: the cycle has ups and downs but not identical spacing that means the time period of occurrence will differ.

It is international in character: the changes in any economic activity of a country have impact on economies of the world (for example financial crisis in US had impact on various other countries economic activities).

The process is cumulative: the process is cumulative in nature, that means change in income level, savings or any other activity will be in aggregates.

RECESSION
Is downturn time period from 2 to 12 months. Economically speaking, a decline in income, employment and total output . If Recession last longer than that, it is called Depression. In the business Cycle graph above we can see that the contraction part is basically the situation which goes through the time period of Recession.

CHARACTERISTICS OF A RECESSION
Investment falls sharply. Housing Prices are the first to decline either because of the financial crisis or the interest rate has been raised by the Central Bank.

Employment usually falls in early stages of recession

Business profit Falls sharply

Consumer purchases often decline. As businesses slow production lines, real GDP falls

As output falls, this leads to a slow down of inflation too


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