Table of Contents
What are the 3 major theories of business cycle?
Keynes has proposed three types of propensities to understand business cycles. These are propensity to save, propensity to consume, and propensity of marginal efficiency of capital. He has also developed a concept of multiplier that represents changes in income level produced by the changes in investment.
What are the 4 stages of the business cycle economics?
The four stages of the cycle are expansion, peak, contraction, and trough. Factors such as GDP, interest rates, total employment, and consumer spending, can help determine the current stage of the economic cycle.
What does business cycle mean in economics?
Business cycles are a type of fluctuation found in the aggregate economic activity of a nation — a cycle that consists of expansions occurring at about the same time in many economic activities, followed by similarly general contractions (recessions). This sequence of changes is recurrent but not periodic.
What are the 4 stages of the business cycle with diagram?
Diagram of Four Phases of Business Cycle The business cycle starts from a trough (lower point) and passes through a recovery phase followed by a period of expansion (upper turning point) and prosperity. After the peak point is reached there is a declining phase of recession followed by a depression.
What are the main characteristics of the business cycle?
1. Business Cycles occur on a regular basis. They feature identifiable phases such as expansion, peak, contraction, depression, and trough, albeit they do not show the same regularity. In addition, Cycle duration varies greatly, from a minimum of two years to a maximum of 10 to twelve years.
What is business cycle diagram?
There are basically two important phases in a business cycle that are prosperity and depression. The other phases that are expansion, peak, trough and recovery are intermediary phases. As shown in Figure-2, the steady growth line represents the growth of economy when there are no business cycles.