Business Cycles Essay - 1804 Words

Business cycles affect all individuals within the population. Whether as part of the general public, consisting of customers and consumers, or as part of the world of business, from small local companies to large multi-national organisations. Obviously, all governments aim for economic growth within societies, in order to achieve national progression. This can include various factors such as high levels of employment, investment and general business confidence. However, things do not always turn out as planned. For example, if economic growth slows down, this can have severe consequences, such as rising levels of unemployment, decreased consumer spending, and eventually bankruptcy of expendable businesses. In this assignment, I†¦show more content†¦Ã¢â‚¬Å"Here cyclical movements are interpreted as manifestations of a mechanism which counterbalances and absorbs the external shocks to which the economy is subjected. They reflect the flexible way in which the economy interacts with its environment.† (Reijnders, 1990) The business cycle develops with the influence of external factors, whether intentionally conducted or unexpected activity. For example, the unexpected activity may be a rapid increase in imported goods resulting in higher demand, and the intentional reaction would be the alteration of policies and rates. Failure to react efficiently could eventually lead to dire consequences, such as a distressed economy. I will expand on the government’s involvement in the matter of business cycles and the economy, as they are a vital component of the system. The government plays a key role in determining the amount of supply and demand of products/services within the economy. They control this by various factors, such as policies regarding taxation, spending and interest rates. The fluctuation of these numbers influence the decision of individuals as well as organisations, whether buying or investing at any given time. However, the government change these figures according to previously decided prerequisites in order to best maintain a healthy andShow MoreRelatedBusiness Cycle1566 Words   |  7 PagesASSIGNMENT 1 Introduction In macroeconomics, business cycle played an important role to show what a national economy is going; therefore, this essay will define what business cycle is and its characteristics. Besides, all of variables such as Real Gross Domestic Product (RGDP), inflation and unemployment rate and their behaviour in the business cycle will be also demonstrated in the second part. The final part of this essay will analyse and compare the situation of Australian economy and USARead More Business Cycle Essay800 Words   |  4 Pageseconomy. The company either suffers or benefits depending on what kind of economy it is. This will depend on what kind of company it is, and what kind of market the business does well in. The Business Cycle is what determines this factor. It is a term used in economics to designate changes in the economy. Timing of the business cycle is not predictable, but its phases seem to be. Many economists site four phases—prosperity, liquidation, depression, and recovery. During a period of prosperity, a riseRead MoreEffect Of The Business Cycle Essay983 Words   |  4 PagesThis study uses time-series data from the CPS March data to investigate the effect of the business cycle from 2003 to 2014 on the wage differentials between females and males. The CPS is a monthly sample survey of approximately 60,000 households conducted by the Census Bureau for the Bureau of Labor Statistics, which can be considered as the primary source of labor force statistics for the population of the United States. This study also uses data from the Local Area Unemployment Statistics (LAUS)Read MoreMexico Business Cycle1260 Words   |  6 PagesMexico’s Business Cycle The term business cycle or economic cycle refers to the fluctuations of economic activity around its long-term growth trend. It involves shifts over time between periods of relatively rapid growth of output-recovery and prosperity, and periods of relative stagnation or decline- contraction or recession. These fluctuations are often measured using real gdp. Despite being termed cycles, these fluctuations in economic growth and decline do not follow a purely mechanicalRead MoreStages of a Business Cycle2741 Words   |  11 PagesSTAGES OF A BUSINESS CYCLE RECESSION A recession—also sometimes referred to as a trough—is a period of reduced economic activity in which levels of buying, selling, production, and employment typically diminish. This is the most unwelcome stage of the business cycle for business owners and consumers alike. A particularly severe recession is known as a depression. RECOVERY Also known as an upturn, the recovery stage of the business cycle is the point at which the economy troughs out and startsRead MoreReal Business Cycles Hypothesis Sees Cycles1839 Words   |  8 PagesIntroduction Real Business Cycles hypothesis sees cycles as starting in frictionless splendidly focused economies with for the most part finish markets subject to genuine stuns (irregular changes in innovation or efficiency), it makes the contention that cycles are predictable with aggressive general harmony situations in which all operators are levelheaded maximizers (The Economist). In opposition to what Keynesian, Monetarist, and new traditional business analysts trusted, RBC scholars, beginningRead MoreMacro Economics - Business Cycles1410 Words   |  6 PagesBusiness Cycles Business Cycles ââ€" º The value of real GDP over time shows periodic fluctuations in its movement ââ€" º The business cycle refers to the periodic fluctuations of economic activity about its long term growth trend ââ€" º The Business cycle is the more or less regular pattern of expansion (recovery) and contraction (recession) in economic activity around the path of trend growth. ï‚ § At cyclical peak, economic activity is high relative to trend ï‚ § At a cyclical trough, the lowRead MoreThe Four Stages Of The Business Cycle799 Words   |  4 Pagesstages of the business cycle are complex phases that our economy undergoes. To grasp the concept of the stages, you must first be familiarized with the business cycle itself. The business cycle is the alternating periods of growth and decline. Or to be more intricate, â€Å"The business cycle is the periodic but irregular up-and-down movement in economic activity, measured by fluctuations in real gross domestic product (GDP) and other macroeconomic variables,† (Inc.com). A business cycle is comprised ofRead MoreKeynes Theory Of Business Cycles Essay2306 Words   |  10 PagesKeynes Theory of Business Cycles Introduction A business cycle refers to a phenomenon of alternating periods of expansion and contraction in economic activity. In many cases such as have been witnessed in free market nations including the USA and Great Britain, economic growth is characterized by long-run upward GNP growth, followed by large periodic short-run fluctuations in economic activity. The economic period associated with high income, output and unemployment, is also known as upswing expansionRead MoreThe Economic Position On The Business Cycle1507 Words   |  7 Pageshe business cycle, also known as the trade cycle, is defined as â€Å"the fluctuation in economic activity that an economy experiences over a period of time† (SOURCE). Basically, the trade cycle is the alternating cyclical movement of economic conditions; phasing through periods of expansion, peaks, contractions, troughs and recoveries. Predicting the whereabouts of a nation and its economy on the trade cycle is a very important challenge; as the d etermination of current and forecasted economic conditions