phases of business cycle essay

GDP increases until it reaches a peak, at which point it declines during the contraction. The industrial activity both speculative and non-speculative shows remarkable expansion. However they vary in duration and intensity. A reduction in short-term interest rates also encourages more investment by reducing the cost of borrowing. Or at least, source of income for the family. Taxes can finance government expenditures such as provision of credit to businesses or budgets for social welfare. The costs are relatively higher the profits of the entrepreneurs decline.

History of Business Cycle : Many people believe that business cycles exist according to the theories. Kondratiev cycles - 48-60 years. Also, Schumpeter labeled the "four-phases " of a cycle which are: boom, recession, depression and recovery. Home Free Essays Four Phases of Business Cycle.

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The most common fiscal policy actions in a recession are: Tax cuts for businesses or for individuals When the economy is struggling during a recession, the government can attempt to help the situation by charging less in taxes. Finally, banks may be unwilling to increase their lending during a recession. Non identical oPeriod of trade cycle are not identical although they recur with great regularity Not symmetrical oPeak and trough are not symmetrical oMovement from upward to downward is more sudden and violent than that from downward to upward oDownturn is sharp and steep. More tourists mean more money injected to the economy. Businesses may be reluctant to invest in new facilities and equipment for expanded operations if the economy is in a recession. There is no reason why a time of full employment has to give way to either a full-fledged boom or a siness Cycle, term used in economics to designate changes in the economy. When more firms sell their output at the same time the price level starts falling. Todays physicians must treat more patients, document interactions more meticulously, wrangle with more complex managed care rules, keep track of an ever-expanding array of drugs, submit and track claims and pay rising malpractice insurance bills. In many cases, the executive and legislative branches work together to cut taxes for Americans. In contrast, more than 50 years after the end of the Depression, the United States experienced its longest expansion, from March 1991 to March 2001, a period of postCold War, pre-9/11 stability that was also the nations longest business cycle.

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