Managerial Economics - Business Cycle
Introduction and Characteristic of Business Cycle
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A study of fluctuations in business activity is called business cycle.
Introduction and Characteristic of Business Cycle
A study of fluctuations in business activity is called business cycle. Business cycle can be defined as a periodically recurring wave like movements in aggregate economic activity (like national income, employment, investment, profits, prices) reflected in simultaneous, fluctuations in major macro economic variables.
R A Gordon defined business cycle as consisting of “recurring alteration of expansion and contraction in aggregate economic activity, the alternating movements in each direction being self-reinforcing and prevailing virtually all parts of the economy”.
1. It occurs periodically: the fluctuations in economic activities occur periodically but not at a fixed period of interval.
2. 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).
3. It is wave like: the fluctuations indicate ups and downs in various economic indicators of a country.
4. 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.
5. 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.
Introduction
A study of fluctuations in business activity is called business cycle. Business cycle can be defined as a periodically recurring wave like movements in aggregate economic activity (like national income, employment, investment, profits, prices) reflected in simultaneous, fluctuations in major macro economic variables.
R A Gordon defined business cycle as consisting of “recurring alteration of expansion and contraction in aggregate economic activity, the alternating movements in each direction being self-reinforcing and prevailing virtually all parts of the economy”.
Characteristic Features Of Business Cycle:
1. It occurs periodically: the fluctuations in economic activities occur periodically but not at a fixed period of interval.
2. 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).
3. It is wave like: the fluctuations indicate ups and downs in various economic indicators of a country.
4. 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.
5. 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.
Tags : Managerial Economics - Business Cycle
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