Saturday, December 14, 2024

BUSINESS CYCLE: EXPANSION, SLOWDOWN, CONTRACTION, RECESSION, DEPRESSION, RECOVERY

 




TRADE /BUSINESS CYCLE: 

The study of ups and downs in the Economy is said to be trade cycle of an Economy.



Expansion: 

  • Expansion is the phase of the business cycle where real GDP grows accompanied by a rise in employment, growth and investments.
  • PEAK in the Economy is that point of time in the Economy when GDP growth rate is at its highest point.

SLOWDOWN: 

  • The phase of the business cycle characterized by decrease in growth rate.
  •  The Size of GDP increases as the GDP growth rate still remains positive.
  • GDP growth rate in : 2017-18-----------------7%,2018-19-----------------6% and 2019-20--------------5% is slowdown as there is slowdown in the growth rate.

CONTRACTION: 

  • GDP growth rate is negative in one quarter resulting in decrease in the size of GDP. 
  • Ex: Q1=+1%, Q2=-1%, Q3=+3%, Q4=.5%

RECESSION: 

  • It is significant decline in economic activities reflected through reduction in GDP growth or negative growth rate, increase in unemployment rate , decrease in demand ,fall in profits  etc,
  •  Technically the slowdown is typically for two quarters. 
  • Ex.Q1=+1%, Q2=-1%, Q3=-3%,Q4=.5%

DEPRESSION: 

  • Depressions is an advanced form of recession lasting longer than three years, resulting in a drop in annual GDP of at least 10%.
  • It is characterized as a dramatic downturn in economic activity in conjunction with a sharp fall in growth, employment, and production. 
  • The world has experienced depressions in 1930 and 2008.

TROUGH: 

Trough is negative peak of a business cycle where activity is bottoming, before a rise.

RECOVERY:

  •  An economic recovery follows after the recession and leads into a new expansionary business cycle phase. 
  • It is sustained period of improving business activity characterized by a rise in (GDP), incomes, and employment rates.


No comments:

Post a Comment

TAX HAVENS, SHELL COMPANY, ROUND TRIPPING

  TAX HAVENS: Tax havens, or offshore financial centers, are generally countries or locations with low or no corporate taxes enabling outs...