BUSINESS CYCLE

Presented by:


 Prasenjeet Thorat
-33
 Shantaram Sonawane
-39
Business Cycle

 Business cycles are recurring

increases and decreases in the level
of economic activity over periods of
time.

 Business cycle are upward and
downward movements in output
prices, interest rates, employment,
profit, real income etc.


 Two main phases of business cycles are

recessions (declines) and
expansions (increases) with turning
A b u sin e ss cycle is a p e rio d o f m a cro e co n o m i
exp a n sio n fo llo w e d b y a p e rio d o f co n tra ctio n
E. Napp
Features of Business
Cycle
ØFluctuation in Aggregate Economic
Activity
ØExpansion and Contraction
Features of Expansion

1)Rising Consumption,production and

Real GDP
2)Increase in Employment
3)Rise in Price
4)Rise in Profit,demand for Credit and
stock prices
Features of Contraction


1)Fall in Consumption, production and

Real GDP
2)Increase in Unemployment
3)Fall in Prices
4)Fall in Profit,demand for Credit and
stock prices
Ø Comovement of Variables
ØRecurrent but not Periodic
The Phases of the Business
Cycle

Expansion Recession Expansion

Peak
om
Bo
Do r n
Total Output

wn t u
tu Up
rn
Secular
growth
trend
Trough

0
Jan.- Apr.- July- Oct.- Jan.- Apr.- July- Oct.- Jan.- Apr.-
Mar June Sept. Dec. Mar June Sept. Dec. Mar June

©
Phases of Business Cycle

 Depression: is a period of low economic

activity

 Recovery: a recession is a business cycle
contraction, a general slowdown in
economic activity.

 Prosperity: Increase in output,
employment, investment,demand,profit,
bank loan,prices,standard of living are the
main features of prosperity.


 Recession: The recession is a period of

Control of Business
Cycle
 The two most important and widely
used economic policies to achieve
economic stability are:



 1) Monetary policy 2) Fiscal policy


  Monetary Policy: Through Bank rate,
open market
operation,SLR,CRR,Selective Credit
Control,etc to change the volume
of money supply.


 FiscalPolicy: Through taxation and

public expenditure helps to
overcome wide business
fluctuation.



 THANK YOU