Welcome to Scribd. Sign in or start your free trial to enjoy unlimited e-books, audiobooks & documents.Find out more
Standard view
Full view
of .
Look up keyword
Like this
0 of .
Results for:
No results containing your search query
P. 1
Business Cycles

Business Cycles

|Views: 112|Likes:
Published by vivekagrawal07
basics of business cycles
basics of business cycles

More info:

Categories:Types, Business/Law
Published by: vivekagrawal07 on Oct 03, 2010
Copyright:Attribution Non-commercial


Read on Scribd mobile: iPhone, iPad and Android.
download as DOCX, PDF, TXT or read online from Scribd
See more
See less





The ups and downs of the general level of economic activity.
Vivek Agrawal
The business cycle is the ups and downs of the general level of economic activity. Allmodern, industrialized countries have fluctuations in their rates of economic activity,leading to the observation that one nation's economy is "booming" while anothereconomy is in a "recession." When an economy goes from a positive to a negativerate of growth, it is said to have reached a "peak" and entered a recession. When aneconomy goes from a negative to a positive rate of growth, it is said to have reacheda "trough" and entered a "recovery."
Although something worthy of being called "the business cycle" does exist, attemptsat finer classifications or subcategories of business cycles have not been particularlyfruitful. Some economists have simply used a broad dichotomy between "major" and"minor" cycles. Descriptively this can be meaningful. A particularly severe recession isreferred to as a "depression." The Depression of the 1930s was quantitativelydifferent from the 1990-1991 recession. The output of the economy fell by almost 50percent in the former and by less than 1 percent in the latter.It is sometimes useful to speak of the cycles of specific time series; that is, theinterest rate cycle, the inventory cycle, the construction cycle, and so forth. Giventhe diversity of general economic cycles, one can find turns in the general level of economic activity in which individual sectors of the economy do, at least for a time,appear to be independent of the rest of the economy. The most frequentlymentioned individual cycles are the inventory cycle, the building or constructioncycle, and the agricultural cycle. The standard business cycle is sometimes referredto as the inventory cycle, and some business cycle theorists popularly explain theseverity of turns in the economy by the coincidence of timing in the individual cycles.The idea of the timing of individual time series relative to the general level of business implies specific dates for the business cycle. How does one establish thepeaks and troughs for the business cycle? To say whether something leads or lags thebusiness cycle, one must have some frame of reference; hence, the business cycle isreferred to as the
reference cycle
and its peaks and troughs as
reference turning points
. (See Table 1.)For the United States, the reference turning points are established by the NationalBureau of Economic Research (NBER), a nonprofit research organization. This

Activity (7)

You've already reviewed this. Edit your review.
1 hundred reads
jayantaaaa liked this
019share liked this
Ankita Gandhi liked this
Gaurav Kumar liked this
driremes liked this
driremes liked this

You're Reading a Free Preview

/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->