Ppt presentation business cycle

Prompt price reduction during depression. This is beginning of the recession phase of the cycle. A criticism of such policies is that they can widen the magnitude of the cycle, with higher levels of unemployment and inflation than there would be if the economy were left on its own.

business cycle diagram

Prosperity is a peak of economic activity. Consumption and investment rise, resulting in higher levels of GDP.

business cycle notes

Thus aggregate demand will pick up, the economy will enter the recovery phase and the cycle will pick up. MEC:- The percentage yield earn on an additional unit of capital Explanation of Keynesian cycle : Explanation of Keynesian cycle Expansion:- High Marginal Efficiency Of Capital Increase in rate of investment Increase in output, employment and income Downturn:- Fall in MEC due to two reasons:- first, as more capital goods are being produced steadily, the current yield on them declines.

business cycle ppt slideshare

Bank rate falls considerably. BUT problems soon emerge The recession will have cumulative effect on the working of the economy.

Business cycle scribd

The longest sustained period of prosperity occurred in U. Recession leads to depression when there is a general decline in economic activity. I will be assessing this from your notebooks. This represents the growth rate the economy can sustain over time, but is not sustainable development. In result investment increases. To meet increased aggregate demand, firms take on more workers so that unemployment falls. Even if the final products consumed are produced domestically, it is quite possible that they will be made up of some imported components.

This illustrates the important point that economies tend to go through periodic fluctuations in real GDP around their long term growth trend, or long term potential output. Optimism take place of pessimism. Coordination of buying programs.

The recovery may take place due to following reasons: New government expenditure.

Causes of business cycle slideshare

A recovery is a rise in business activity after a recession or depression The new demand for goods and services stimulates more production, and the GDP grows Recovery leads back to prosperity as new businesses open and existing businesses increase productivity A recovery can take a long time or it can happen quickly During a recovery, some businesses innovate-meaning that they bring out new goods and services. Changes in technologies of production. Write a letter to the editor of the newspaper explaining what steps you might take in your business as a result. Comprehensive long-range programs. MEC:- The percentage yield earn on an additional unit of capital Explanation of Keynesian cycle : Explanation of Keynesian cycle Expansion:- High Marginal Efficiency Of Capital Increase in rate of investment Increase in output, employment and income Downturn:- Fall in MEC due to two reasons:- first, as more capital goods are being produced steadily, the current yield on them declines. The newly employed workers spend their new incomes on durable goods and the process repeats itself. This is known as the business cycle or trade cycle. Capacity constraints in the economy are likely to slow down further increases in GDP and lead to inflationary pressures. However, there are no straight answers to these questions. KEYNES Expansion : Expansion Expansion is characterized by high capital investment in basic industries as a result high stocks, high prices, high profits and over-full employment. This illustrates the important point that economies tend to go through periodic fluctuations in real GDP around their long term growth trend, or long term potential output.
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Business cycle PPT