Question 1.1
The business cycle starts from a cashbox (lower distributor point) and passes through a recovery phase followed by a period of magnification (upper turning point) and prosperity. After the peak point is reached thither is a declining phase of recession followed by a depression. Again the business cycle continues similarly with ups and downs.
Prosperity Phase
When there is an expansion of output, income, employment, prices and profits, there is also a rise in the standard of living. This period is termed as Prosperity phase.
* The features of prosperity argon :-
* High aim of output and trade.
* High level of useful pick out.
* High level of income and employment.
* Rising interest rates.
* Inflation.
* Large expansion of bank credit.
* Overall business optimism.
* A high level of MEC (Marginal efficiency of capital) and investment.
Due to extensive employment of resources, the level of deed is Maximum and there is a rise in gross national product (Gross National Product). Due to a high level of sparing activity, it causes a rise in prices and profits. There is an upswing in the stinting activity and economy reaches its Peak. This is also called as a bellowing Period.
Recession Phase
The turning point from prosperity to depression is termed as Recession Phase.
During a recession period, the economic activities slow down. When demand starts falling, the overproduction and future investment plans are also assumption up. There is a steady exasperate in the output, income, employment, prices and profits. The businessmen lose confidence and become pessimistic (Negative). It reduces investment. The banks and the spate tense to get greater liquidity, so credit also contracts. enlargement of business stops, stock market falls. Orders are cancelled and people start losing their jobs. The increase in unemployment causes a sharp decline in income and aggregate demand. Generally, recession lasts for a short period.
embossment Phase
When there is a continuous...If you want to get a full essay, order it on our website: Ordercustompaper.com
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