This presentation is based on the business cycle as a whole and its effects in the employment, production, inflation as well as government interference.
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Business Cycles Presentation This is the collection of different presentations based on the Business Cycles from Slide share.
Transcript
1. Business Cycles Presentation This is the collection of
different presentations based on the Business Cycles from Slide
share. Compiled by Thabani
2. The Business Cycle BUSINESS CYCLES LG5 Business Cycles --
Periodic rises and falls that occur in economies over time. Four
Phases of Long-Term Business Cycles: 1. Economic Boom 2. Recession
Two or more consecutive quarters of decline in the GDP. 3.
Depression A severe recession. 4. Recovery When the economy
stabilizes and starts to grow. This leads to an Economic Boom.
2-4
3. Features of Business Cycles Variable Peak Expansion
Recession Trough Industrial Production Increase Rapid increase
Decline Lowest Demand Increase Highest Decline Lowest Prices Cost
Increase Rapid increase decline rapid decline Increase Rapid
decrease Gradual decline Rapid decline Investment Increase High
Falls slowly Falls rapidly Employment Gradual increase Rapid
increase Falls Rapid falls Liberal Falls Rapid falls Very
liberal
4. Business Cycle The business cycle is the periodic but
irregular up-and-down movements in economic activity, measured by
fluctuations in real GDP and other macroeconomic variables A
business cycle is identified as a sequence of four phases:
Contraction (A slowdown in the pace of economic activity) Trough
(The lower turning point of a business cycle, where a contraction
turns into an expansion) Expansion (A speedup in the pace of
economic activity) Peak (The upper turning of a business
cycle)
5. What does a model of the business cycle look like?
6. The Business Cycle: diagram Peak Growth Recession GDP Trough
or Depression TIME
7. Business Cycle : Diagram Expansion Recession Expansion Total
Output Peak Secular growth trend Trough 0
8. WHAT ARE THE PHASES OF THE BUSINESS CYCLE AND THE
CHARACTERISTICS OF EACH?
9. PHASES OF THE BUSINESS CYCLE Expansion/Growth: During this
phase of the business cycle, consumer and business spending rise.
Peak: After a period of growth, an economy will reach a peak, where
business is producing at or near full capacity, and the economy is
at or near full employment.
10. Indicators of Business Cycles There are variables other
than real GDP that influence the business cycle. They are
classified into three: (1) Leading Indicators: generally change
before real GDP changes. Can be used to forecast future output. (2)
Coincident Indicators: tend to change at the same time as real
output changes eg: as real output increases employment and sales
rise Ref: MB p.136
11. Recession Recession: This is a phase when real GDP begins
to decline. Consumers and business reduce their spending,
unemployment rises, investment declines, and pessimism about the
economy is likely to grow.
12. Recession
13. Trough/Depression Trough/Depression: This is the lowest
point of the business cycle. Factories will be operating below
capacity, allowing unemployment to reach high levels
14. Sources of Business cycle AGGREGATE DEMAND AGGREGATE SUPPLY
The degree to which real GDP declines or increases depends on the
amount by which AD and AS curve shifts.
15. Business and a Boom A boom occurs when national output is
rising at a rate faster than the trend rate of growth It is
characterised by HIGH consumer spending, high business confidence,
investments and profits There is a lot more output.
16. CAUSES OF BUSINESS CYCLES External factors 1. Inventions
and innovation: Major changes in technology can influence the
business cycle. Usually technological changes move the economy in a
positive direction, but this is not always so. 2. Wars and
political events: The impact of such events on the economy are very
fact specific- in other words, difficult to generalize about.
17. A THOUGHT ON THE BUSINESS CYCLE The business cycle tends to
be selfsustaining. In other words, when in a period of growth, the
economy will continue to grow (jobs leading to jobs) until some
event (internal or external) intercedes.
18. A Good Cycle More goods produced More spending More
jobs
19. A Bad Cycle Fewer Jobs Less Spending Fewer Goods
Produced
20. GOVERNMENT AND THE BUSINESS CYCLE In order to prevent the
economy from running too hot (inflation) or too cold
(recession/depression), the government often becomes involved in
efforts to try and stabilize the economy. The government has two
major tools to try and stabilize the economy and achieve its goals:
fiscal policy and monetary policy.
21. FISCAL POLICY Fiscal policy is the taxing and spending
decisions that are made by the President and Congress. Fiscal
policy actions of the government fall into two general categories:
1. Raise or Lower Taxes 2. Increase or Decrease Government
Spending.
22. FISCAL POLICY During a Recession The Government can Lower
taxes and/or Increase spending These actions boost the economy by
putting more money in the hands of people so they can spend it.
This is called Expansionary Fiscal Policy
23. Example of PEPSICo India Business Cycle
24. Growth Phase Boom Phase Launched in India in 1988
Consistent Growth. Waves of optimism. Highest point of Expansion.
Rise in profits, investment, sales, employment etc.
25. Expansion RETAIL MARKET SHARE OF BEVERAGE PRODUCTS Bottled
Water 13% Teas 3% Sports Drinks 2% Fruit Drinks 16% Colas 66%
26. Recession Uncertain downfall. Controversies. Outcome-
Decline in profits, sales etc.
27. Revival Turning point from depression into expansion. A
result of New Innovation.
28. References Aggarwal. A, Goyal. R, Jhamb. S, Gaurav. S,
Karwa. A, & Rathi. R. (2012). Recesion in Japan& United
State:
http://www.slideshare.net/search/slideshow?searchfrom=header&q=Presentation+On+Recession+In+
Japan+%26+United+States.03 (March 2014) Bobby. A, Sharma. A,
Vineetha. K, Raghvandra. Y, Rohit. P& Vaibhav. J. (2010).
Business Cycles:
http://www.slideshare.net/SameerAlam/mrktng-b-group5-business-cycle?qid=dbcecc0b-eb11-4020b455-84c8c7d42ac9&v=default&b=&from_search=34.
(05 March 2014) Akshbapna. D. (2014): Business cycles:
http://www.slideshare.net/dakshbapna/business-cycle31444513?qid=123708e7-dd05-4886-b3f5-1ff309916edf&v=qf1&b=&from_search=2.
06 March 2014. Becker. B, (2013). Corporate credit and Business
cycle:
http://www.slideshare.net/GlobalUtmaning/bobecker?qid=123708e7-dd05-4886-b3f5-1ff309916edf&v=qf1&b=&from_search=8.
05 March 2014. Singla. H, (2012). Business Cycle:
http://www.slideshare.net/harshulsingla/businesscycle1?qid=123708e7-dd05-4886-b3f5-1ff309916edf&v=default&b=&from_search=21.
05 March 2014.