All work is written to order. Share Your PDF File Which scenario best reflects the relationship between production and demand in a recession? When a downward movement starts, it persists in the same direction leading to the worst depression and stagnation till it is retrieved to gain an upward movement. For many goods, the length of the product cycle is shrinking. Join now. Because each firm makes a unique product, it can charge a higher or lower price than its rivals. These phases of business cycles are shown in the following: 1. The whole process becomes self-reinforcing. The upward movement and downward movement are cumulative in their process. Explanation of Four Phases of Business Cycle 1. Boom or Prosperity: During the recovery phase, rise in output and incomes of the people induces substantial increase in aggregate spending. Agricultural Extension Services and other state agencies provide complementary data. As a result, purchasing power of workers, who form a majority of the people, tends to lag behind the supply of consumer goods. When production is very high but demand is very low, it can lead to. Ask your question. This reduces the deposits with banks and other financial institutions. As effective demand increases, income rises faster than before. This period is termed as Prosperity phase.The features of prosperity are :- High level of output and trade, High level of effective demand, High level of income and employment, Rising interest rates, Inflation, Large expansion of bank credit, Overall business optimism. VAT Registration No: 842417633. Monopoly avoids duplication and hence wastage of resources. Depression Phase : Contraction or Downswing of economy.When there is a continuous decrease of output, income, employment, prices and profits, there is a fall in the standard of living and depression sets in. The Kondratiev cycle or Kondratiev wave is a cycle-like phenomenon of economic expansion and contraction over a fifty-year period. Which of the following events most likely explains renewed demand in a recovery period? Donald Trump or Joe Biden? There is a steady rise in output, income, employment, prices and profits. The cost stagnant prices high levels of production ambivalence about the economy reduced incomes - edu-answer.com In peak phase, the economic factors, such as production, profit, sales, and employment, are higher, but do not increase further. Buying pattern of individuals will be different. According to Haberler, prosperity is “a state of affairs in which the real income consumed, real income produced and the level of employment are high or rising, and there are no idle resources or unemployed workers or very few of cither”. Meaning of Business Cycles: Business cycle or trade cycle is a part of the capitalist system. ! Free resources to assist you with your university studies! This website includes study notes, research papers, essays, articles and other allied information submitted by visitors like YOU. Check all that apply. But there need not be uniformity in the extent and magnitude. Which best describes the nature of cause and effect in the context of the business cycle?
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