Like we have seasons, the same goes for the business,
and it has its seasons and the business cycle. SO what is the business
cycle? The changing economic conditions of the country from time to time
owing to industrial growth, import and export, and various other
activities is known as the “business cycle.” The GDP (Gross Domestic
Product) movement due to different economic factors is termed as a
business cycle, which means the upward and downward trend of the
economic activity when there is a growing trend in the long run says Gaurav Mohindra.
Phases of Business Cycle or Economic Cycle
There are many phases of the economic cycle.
Generally, there are four stages of the business cycle: expansion,
contraction, peaking, and trough.
The boom in employment, the rising of the business,
and inflation are different characteristics of expansion. When business
is at the top, it is called peaking of the market, I.e. there is lack of
unemployment, there is full demand in spite of the high prices. There
is always some correction after the company has attained the optimum
level, which is a sign of slowdown or contraction; the decreasing level
of employment and costs of the commodities start cooling down.
The downward trend comes to a halt at the trough, and
the cycle of the business has hit bottom, and the economy starts
growing up, and the next phase of the business cycle begins Gaurav Mohindra.
The Gross Domestic Product of the country usually determines the
economic cycle of the country, whether there is a slowdown or there is
an upward trend in the economy.
The National Bureau of Economic Research in America
is the final authority that decides the various trends of the economic
cycle. All commercial activities come to a standstill during the
recession, which continues for a few months.
There is a decline in GDP, the income of the people,
lack of employment, and a decrease in industrial production during the
recession. If the GDP does not revive in the two consecutive quarters,
the economy is in a state of depression, and there is no upward trend.
So these are the trends that determine the business
cycle. It all depends on the economic cycle, which determines the
fluctuations in the business cycle. In the boom, when the market is in
better condition and flourishing, it is a better time for business Gaurav Mohindra.
And when there are sluggish conditions in the market, the business
suffers through a hard time. But these ups and downs are part and parcel
in every business, and the integrity of these cycle differ from
industry to industry in which the company operates. Also, the country
business policy depicts a lot of what period the business goes through.
Originally Posted: http://www.gauravmohindrachicago.com/business-cycle-and-its-trends/
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