Recovery - Phases of business cycle

Question

Explain about the term Recovery in phases of business cycle.

Answer 1

Recovery:

Depression phase does not carry on indefinitely. Depression includes in itself the gems of recovery. The regulation workers now come forward to work at low wages. Since the prices are at its lowest the consumers, who postponed their consumption expecting a still further fall in price, here starts consuming. The banks, along with accumulated cash reserves, currently come forward to provide loans at easier terms and lower rates. Since demand increases the stock of goods become inadequate. Now the economic activity starts picking up and the investment pickup. Service and output slowly and steadily begins to grow. Raised income raises demand, resulting in rise in prices, employment, profits investment and incomes. The wave of recovery when initiated soon begins to feed on itself. Stock markets become live therefore hastening the revival. Optimism expands among the entrepreneurs. Demands and bank loan for credit starts rising.