22
Wed, Nov

Business Cycle Prosperity & Adversity

Business
Typography

In capitalistic economies the economic activities are not alike. Sometimes there is risk in business life while on other occasions, the business activity is sluggish. Such ups and downs in business are accorded as...

In capitalistic economies the economic activities are not alike. Sometimes there is risk in business life while on other occasions, the business activity is sluggish. Such ups and downs in business are accorded as business cycle or trade cycle.

Habeler says, "Business cycles are just the names of prosperity and adversity; good trade and bad trade". According to W. C. Mitchel, trade cycles are the fluctuations in the aggregate economic activity. An the words of J. R. Hicks, "Trade cycles represent fluctuations in the real national income of the economy. Such fluctuations occur because of economic growth, consequent upon changes in labor force, innovations and inventions, capital accumulations and natural resources.

Explanation of Business Cycle with ADC and ASC:

Now a days the economists think that a business cycle occurs because there occur fluctuations in aggregate demand and short run aggregate supply curve and the monetary wages do not adjust quickly that real GDP does not remain at the level of maximum ( or Potential ) level of GDP. Therefore, if AD falls short of long run AS, the economy will suffer from Recession.



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