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 the day time, the weather of a place is rather sultry and sunny, but in the evening a cool wind announced the approach of a storm which eventually came. Thus there was a rise and fall, or rather a change in the weather of that place. This entire phenomenon can be equated to the financial rise and fall, which is comprehensively analysed through a business cycle. It basically measures the fluctuations that a particular economy undergoes within a stipulated period of time. Classification by periods
To understand the business cycle, economic analysts over the ages have established various classifications of the cycle based on the time period. There are mainly 4 types of business cycles which have been established and they are- •
Kitchin inventory cycle: this form of business cycle measures the fluctuations over the period of only 3 and 5 years. •
Juglar fixed-investment cycle: this type operates for a period of which extends between 7 and 11 years. This is often referred to as the business cycle •
The building or the Kuznets infrastructural investment cycle: this captures the fluctuations over a large period of time which stretches between 15 and 25 years. •
Kondratiev wave: this is the largest business cycle till date which covers a time period between 45 and 60 years. Commodity prices and freight rates
To completely understand the facts mentioned in a business cycle there are few key terms that one should be familiar with so that it becomes easier for them. One such...
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