12/21/2018 4 Phases of Business Cycle in Economics with Diagram

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4 Phases of Business Cycle in

Economics with Diagram
Post: Gaurav Akrani. Date: 6/18/2011. Comments (2). Label: Economics.

Four Phases of Business Cycle

Business Cycle (or Trade Cycle) is divided into the following four phases :-

1. Prosperity Phase : Expansion or Boom or Upswing of economy.

2. Recession Phase : from prosperity to recession (upper turning point). Flat 30% o Flat 30% o

3. Depression Phase : Contraction or Downswing of economy.

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4. Recovery Phase : from depression to prosperity (lower turning Point). Nanodegree

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Diagram of Four Phases of Business Cycle

The four phases of business cycles are shown in the following diagram :-

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3 Phase
The business cycle starts from a trough (lower point) and passes through a
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recovery phase followed by a period of expansion (upper turning point) and And Business Cures Alopecia, Hair Loss, Bald
prosperity. After the peak point is reached there is a declining phase of
What is Credit Card? Meaning
recession followed by a depression. Again the business cycle continues
Definition Size Anatomy Glossary
similarly with ups and downs.
Difference Between Primary and
Secondary Data

Explanation of Four Phases of Business Cycle Top Inventions and Discoveries

by Scientists - A to Z List - Science
The four phases of a business cycle are briefly explained as follows :-
How to Improve Human
Relations?

1. Prosperity Phase How To Prepare For Successful

Job Interviews ? Best Interview Tips
When there is an expansion of output, income, employment, prices and profits, How To Summarize Passage ?
there is also a rise in the standard of living. This period is termed as Prosperity Summarization Skills Techniques
phase. Basic Principles of Insurance -
Examples of Insurance Principles
The features of prosperity are :-
Indian Money Market - Features,
Drawbacks and Recent Reforms
1. High level of output and trade.
Concept of Marketing Research
2. High level of effective demand. (MR) Marketing Research Process
3. High level of income and employment.

4. Rising interest rates.

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12/21/2018 4 Phases of Business Cycle in Economics with Diagram

5. Inflation.
MANAGEMENT
6. Large expansion of bank credit.

7. Overall business optimism.

Management Functions And
8. A high level of MEC (Marginal efficiency of capital) and investment. Process, Management Thought

Planning First Primary Important

Function Of Management
Due to full employment of resources, the level of production is Maximum and
there is a rise in GNP (Gross National Product). Due to a high level of Management By Objectives
(MBO) - Peter Drucker MBO
economic activity, it causes a rise in prices and profits. There is an upswing in
the economic activity and economy reaches its Peak. This is also called as a Decision Making Process In
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Management - Problem Solving
Boom Period.
Authority, Responsibility and
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Accountability In Management
2. Recession Phase Principle of Delegation of
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The turning point from prosperity to depression is termed as Recession Phase.
Organisation - Organizational
Structure - Organisational Chart
During a recession period, the economic activities slow down. When demand
starts falling, the overproduction and future investment plans are also given up. Decentralisation Advantages and
There is a steady decline in the output, income, employment, prices and profits. Limitations of Decentralization
The businessmen lose confidence and become pessimistic (Negative). It Managerial Leadership - Leader
reduces investment. The banks and the people try to get greater liquidity, so Qualities - Leadership Theories
credit also contracts. Expansion of business stops, stock market falls. Orders Human Resource Management -
are cancelled and people start losing their jobs. The increase in unemployment Human Resource Development
Flat 30% o
causes a sharp decline in income and aggregate demand. Generally, recession Motivation Motivational Factors
lasts for a short period. Intro to Self-Driving Incentives Theories of Motivation
Car
Maslow's Hierarchy of Needs -
The Theory of Human Motivation
3. Depression Phase Rs31,430
Frederick Herzberg's Two Factor
When there is a continuous decrease of output, income, employment, prices Theory - Motivation Hygiene Factors
and profits, there is a fall in the standard of living and depression sets in. Douglas McGregor's Theory X
and Theory Y - Employee Motivation
The features of depression are :-
David McClelland's Achievement
NEW ARTICLES Motivation, Manifest Need Theory
1. Fall in volume of output and trade.
Marketing Mix and 4 P's of The
2. Fall in income and rise in unemployment. Importance of Marketing Marketing - Management Article
Research to Government
3. Decline in consumption and demand. What is Market Segmentation ?
Fayol's Principle of Division of Importance In Modern Marketing
4. Fall in interest rate.
Work - Meaning, Example,
5. Deflation. Explanation 5 m's of advertising and
advantages of advertising
6. Contraction of bank credit. Principles of Good Layout for an
Advertisement Copy Quality Control Total Quality
7. Overall business pessimism. Management TQM Quality Circles
Basic Assumptions of Law of
8. Fall in MEC (Marginal efficiency of capital) and investment. Demand

In depression, there is under-utilization of resources and fall in GNP (Gross

National Product). The aggregate economic activity is at the lowest, causing a FINANCE
decline in prices and profits until the economy reaches its Trough (low point).
What is Finance? Meaning
Definition Features of Finance
4. Recovery Phase What is Financial Planning?
Meaning Types of Financial Plans
The turning point from depression to expansion is termed as Recovery or
Revival Phase. What is Financial Management?
Meaning Definition Scope Articles

During the period of revival or recovery, there are expansions and rise in What is Corporate Finance?
economic activities. When demand starts rising, production increases and this Meaning - What it Includes?
causes an increase in investment. There is a steady rise in output, income,
employment, prices and profits. The businessmen gain confidence and become
optimistic (Positive). This increases investments. The stimulation of investment
BANKING
brings about the revival or recovery of the economy. The banks expand credit,
business expansion takes place and stock markets are activated. There is an
increase in employment, production, income and aggregate demand, prices What is a Bank ? Introduction,
Definition and Features of Bank
and profits start rising, and business expands. Revival slowly emerges into
prosperity, and the business cycle is repeated. Different Types of Banks - What
are Various Kinds of Banks ?
Thus we see that, during the expansionary or prosperity phase, there is inflation Commercial Banks - Definitions,
and during the contraction or depression phase, there is a deflation. Primary Secondary Functions

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12/21/2018 4 Phases of Business Cycle in Economics with Diagram

Balance Sheet of Commercial

Bank - Liabilities and Assets

How to Open Bank Account ? 7

Steps To Open Bank Account
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What are the Advantages of
Opening Bank Account ?

Saving Account Bank - Meaning,

Features and Advantages of It

Fixed Deposit Account of Bank -

Meaning, Features, Advantages

What is Current Bank Account ?

Its Features and Advantages
Digital Marketing Blockchain Developer
Recurring Deposit Account In
beginner intermediate Bank - Meaning and Features

What is a Cheque ? Definition -

Kinds and Types of Cheques

Custom Search What are Features of Cheques ?

Main Characteristics of Checks

What is Crossing of Cheque ?

Different Types of Check Crossing
Related Automated Teller Machine (ATM)
- The Advantages of ATM Machine

E-Banking - Online Banking -

Main Advantages of E-Banking

Principles of Good Lending Every

Banker Follows - Loans

Different Forms of Advances by

Commercial Banks - Loan Types

Duties and Responsibilities of

What is Trade Introduction To What is Business ? Computer Operator in Bank
Cycle? Meaning, Managerial Meaning,
Definition, Features Economics - Indian Definitions, Nationalisation of Banks in India -
and Types Economics 1 Features of ... Introduction Objectives Demerits

Linkwithin Narasimham Committee Report I

1991 II 1998 - Recommendations

New Economic Reforms of the

Banking Sector In India - Brief
4 Phases of Business Cycle in Economics with Diagram Functions of Reserve Bank of
India (RBI) - Credit Policy of RBI
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2 Comments:
Banking

Anonymous said... Business Development

October 26, 2013 at 3:22 PM
Communication Skills
Well illustrated and precise for an economist like me
Distinguish Between

Anonymous said... Economics

July 17, 2014 at 4:50 PM
Education
Your articles are always very good and to the point... I always prefer your
notes.. Finance

Industrial Psychology
Please Comment Kalyan City

Management

Marketing Research

Production Planning

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12/21/2018 4 Phases of Business Cycle in Economics with Diagram

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