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.
