Business Cycle

Satisfactory Essays
Professor Diaz-Greco January 23, 2013 MWF 11:00-11:50 Diego Aguinaga
ECO2021
The Business Cycle
The business cycle, it is also called economic cycle, are periodically and unstable levels in the economy that an economy has in different periods of time. Even though it was considered to be predictable and stable, it is now considered as unpredictable, and unstable that could vary in any time. The Business cycle will guide the businesses, industries, and companies to act in a specific way, depending in which of the 4 phases the business cycle is. Since business cycle could be on the peak and then turn to be in recession, or it could be in recession and change to recovery, it will make each manager to determine what decision will lead their business in the market.
The business Cycle has 4 different phases, which are Prosperity, Recession, Recovery, and Depression. Then it repeats continuously over and over.
1. - Prosperity, it is the phase when the economy passed from Recovery through Prosperity, which means that the economy is growing, and there is more demand in supplies and resources are enough to satisfied demand so that the economy expands. It also lead the economy to be on the peak, which means that there is enough jobs for employees, more capital, more entrepreneurial grow, and so on that will lead the economy in a good level or Boom Period.
2.-Recession, it is the phase when the economy passed from prosperity or Boom period to fall into Recession, which means that the market will be limited, demand falls, unemployment grows, and businesses will turn pessimistic so that they lose confidence. All this make the economy falls and stay in a recession phase for a period of time.
3.-Depression, it is the phase when recession goes worse and fall deeper in the scale of the business cycle. It will lead the economy to continuously

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Business Cycle

    • 822 Words
    • 4 Pages

    economy. The company either suffers or benefits depending on what kind of economy it is. This will depend on what kind of company it is, and what kind of market the business does well in. The Business Cycle is what determines this factor. It is a term used in economics to designate changes in the economy. Timing of the business cycle is not predictable, but its phases seem to be. Many economists site four phases—prosperity, liquidation, depression, and recovery. During a period of prosperity, a…

    • 822 Words
    • 4 Pages
    Satisfactory Essays
  • Satisfactory Essays

    business cycles

    • 804 Words
    • 4 Pages

    BUSINESS CYCLES Trend and cycle of the business cycle Phases of the cycle Pro‐cyclical, counter‐cyclical, and a‐cyclical variables Lead, lagged, and contemporary variables Stylized facts and cyclical behavior of key macroeconomic variables 2 BUSINESS CYCLES Over time GDP grows but not in a linear way GDP 2006 constant prices (in logs) 6.5 6.3 6.1 5.9 5.7 5.5 5.3 5.1 4.9 4.7 4.5 3 BUSINESS CYCLES Time Series Components 1. 2. 3. 4. Trend (long‐run) Cycle (short‐run)…

    • 804 Words
    • 4 Pages
    Satisfactory Essays
  • Good Essays

    The Business Cycle

    • 696 Words
    • 3 Pages

    The business cycle is like a roller coaster and this roller coaster definitely has its dips and peaks. In the cycle there are expansionary periods, peaks, downturns, and troughs. Each one is part of and essential in the cycle. Like a roller coaster you will go up and reach a peak and then you will have to drop. Although just because you drop does not mean you will reach the lowest point of the ride. Just like a coaster the business cycle has its high peaks and plunging drops. So lets start the…

    • 696 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Business Cycle

    • 4238 Words
    • 17 Pages

    the attempt to understand the causes and consequences of short-run fluctuations in national income (the business cycle), and the attempt to understand the determinants of long-run economic growth (increases in national income). Macroeconomic models and their forecasts are used by both governments and large corporations to assist in the development and evaluation of economic policy and business strategy. Basic Macroeconomics Concepts Macroeconomics encompasses a variety of concepts and variables…

    • 4238 Words
    • 17 Pages
    Good Essays
  • Good Essays

    Business Cycle

    • 503 Words
    • 3 Pages

    Business Cycle What is it? The economy of a certain country, in this world of global understanding makes a huge difference to the world economy. The rise and fall of the market determines the prices of various things all over the world. Economy is something which does not remain static, it changes, sometimes very quickly, sometimes gradually. The rise and fall of the economy is basically what is identified as a business cycle. This can be best explained with a simple example. Suppose during…

    • 503 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Business Cycles

    • 627 Words
    • 3 Pages

    Chapter 10 (Business Cycles) Business Cycles (business Flucuations) The ups and downs in economy wide economic activities are called business cycles or busyiness fluctuations. When business fluctuations are positive they are called expansion, the opposite of expansion is contraction which is slow down in the pace of national economic activities. Phases of the business cycle over a several year period 1. A peak is when business activity reaches a temporary maximum with full employment and near…

    • 627 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Business Cycle

    • 649 Words
    • 3 Pages

    Phases of Business Cycle Business Cycle (or Trade Cycle) is divided into the following four phases :- Prosperity Phase : Expansion or Boom or Upswing of economy. Recession Phase : from prosperity to recession (upper turning point). Depression Phase : Contraction or Downswing of economy. Recovery Phase : from depression to prosperity (lower turning Point). Diagram of Four Phases of Business Cycle The four phases of business cycles are shown in the following diagram :- The business cycle…

    • 649 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    Business Cycles

    • 285 Words
    • 4 Pages

    A Presentation on Different phase of Business Cycle Business Cycles √ The term business cycle refers to the recurrent ups and downs in the level of economic activity, which extend over several years. √ Individual business cycles may vary greatly in duration and intensity. √ All display a set of phases. THE BUSINESS CYCLE Phases of the Business Cycle RECESSION TROUGH RECOVERY Level of business activity PEAK Time Level of business activity PEAK H T OW D R G N E R T Time √ Peak or prosperity phase:…

    • 285 Words
    • 4 Pages
    Satisfactory Essays
  • Good Essays

    Business Cycle

    • 548 Words
    • 3 Pages

    result, contractions and expansions of an economy's real output over time are inevitable. And while these fluctuations are the result of natural interactions between sellers and buyers, government intervention also affects these intervals. The business cycle is unavoidable because, in part, it is the economical representation of a volatile element: human psychology. In the example above, consumers are predictable. But we all know consumer preferences and their senses of well-being change, sometimes…

    • 548 Words
    • 3 Pages
    Good Essays
  • Better Essays

    Business Cycle

    • 1577 Words
    • 7 Pages

    ASSIGNMENT 1 Introduction In macroeconomics, business cycle played an important role to show what a national economy is going; therefore, this essay will define what business cycle is and its characteristics. Besides, all of variables such as Real Gross Domestic Product (RGDP), inflation and unemployment rate and their behaviour in the business cycle will be also demonstrated in the second part. The final part of this essay will analyse and compare the situation of Australian economy and USA…

    • 1577 Words
    • 7 Pages
    Better Essays