--%>

What are the characteristics of a business cycle

What are the characteristics of a business cycle?

E

Expert

Verified

Characteristics of a business cycle are as follows:

1. This is synchronic. The downward and upward movements tend to arise at all similar period in all industries. The waves of depression or prosperity generate a wave in another industry. While industry picks up to provide more service and more income and so forth to workers and this provides new orders for capital goods and raw materials. It helps other firms to prosper as well.

2. The cycle is a wave-as movement. The era of prosperity and depression can be alternately considered in a cycle.

3. Cyclical fluctuations are recurring within nature. The different phases are repeated is followed through depression and the depression again in followed through a boom.

4. In nature business cycles are cumulative and self –reinforcing. All movements feed on itself and keep up the movement in similar direction. Once booms starts this goes on growing until forces accumulate to reverse the direction.

5. There can be no indefinite eternal or depression boom period. All phase include in itself the seed for other phase. So, the boom, when this reaches its peak, turns to recession.

6. Business cycles are pervasive within their effects. The cyclical fluctuations influence each and every part of the economy. Prosperity or depression felt in one part of the economy makes its impact in other part as well. The cyclical movements are still international in nature. The mechanism of international trade creates the boom or depression in one country shared though other countries also.

7. Presence of a crisis. The down and up movements are not symmetrical. There downward movements are not symmetrical. And there downward movement is more rapid and violent than the upward movement.

   Related Questions in Managerial Economics

  • Q : Explain managerial economics as a tool

    Does managerial economics as a tool for decision making? Explain this term.

  • Q : Demands of consumers adjusting to new

    CD sales have fallen from 2000, although sales of DVDs have increased, suggesting such that: (w) supply of prerecorded music should have fallen. (x) law of demand does not apply to the music market. (y) demands of many consumers adjusted to new technology. (z) music i

  • Q : Profit Maximization with Marginal

    All profit-maximizing firms will hire further labor up to the point where is the: (w) average physical product of labor equals the nominal wage. (x) last unit of labor adds equally to total revenue and total cost. (y) marginal product of labor is at i

  • Q : Income effect of a small wage rate

    The income effect of a small change within the wage rate for that worker most strongly exceeds the substitution effect at a wage rate of: (1) $5 per hour. (2) $10 per hour. (3) $10 per hour to $25 per hour. (4) $25 pe

  • Q : Explain the term average fixed cost

    Explain the term average fixed cost.

  • Q : Illustrate Screening by Asymmetric

    Insistence by a potential employer which job applicants submit a résumé is an illustration of: (1) networking. (2) screening. (3) signaling. (4) bragging. (5) qualifying. Please choose the right answer from above...I

  • Q : Illustrates the responsibilities of

    Illustrates the responsibilities of managerial economists?

  • Q : Supply of labor by increase in wages

    If the wage rate increases from $25 per hour to $40 per hour, in that case the elasticity of the supply of labor from this worker is roughly: (i) zero. (ii) 7/15. (iii) 13/15. (iv) one. (v) minus 13/15.

    Q : Free labor in competitive firm When

    When labor was free, in that case this purely competitive firm as in illustrated graph would hire. (1) 600 workers. (2) 700 workers. (3) 800 workers. (4) 900 workers. (5) 1000 workers.

    Q : Value of the Marginal Product and

    When a firm is a price taker in the sale of its product, in that case labor’s: (w) ARP (Average Revenue Product) = MRP. (x) ARP = VMP. (y) VMP > MRP. (z) VMP = MRP. Can someone explain/help me with best so