Effects of Business Cycles - 1731 Words

Introduction In general the economy tends to experience different trends. These trends can be grouped as the business/trade cycle and may contain a boom, recession, depression and recovery. A business/trade cycle (see figure 1) is the periodic but irregular up-and-down movements in economic activity, measured by fluctuations in real Gross Domestic Product (GDP) and other macroeconomic variables. Samuelson and Nordhaus (1998), defined it as ‘a swing in total national input, income and employment, usually lasting for a period of 2 to 10 years, marked by widespread expansion or contraction in most sectors of the economy’. These fluctuations in economic activity usually have implications on employment, consumption, business confidence,†¦show more content†¦USA budget deficit, which for 2006 fell to $247.7 billion, the lowest in four years is of much concern. The September 11 terrorism attacks has aided to the retrenchment of economic activity and this has also affected the leve l of confidence in businesses and consumers. In 2000, consumer debt growth of 8.6% compared with real disposable income growth of 4.8%. During the first quarter of 2006, private household debt grew to 11.6% annually compared with zero real disposable income growth. The thriving technology in the USA led to a large number of investment in information processing equipment and software resulting in high equity values which also resulted in a decline by the second quarter of 2000. In October 2001employment fell by 439,000 jobs, and unemployment rate soared from 4.9% to 5.4%. Over 500,000 jobs were lost in the recession and a further one million jobs were destroyed in the weak â€Å"job-loss† recovery from November 2001 to June 2003. People who lived below the poverty line jumped from 31.06 million to 34.06 million by 2002. This recession could have been avoided, however the argument against government intervention using discretionary fiscal policy to tackle recession accentuates the long time lags involved in altering fiscal policy in USA. There was proof in 2000 that the USA economy was slowing. Congress passed a tax cut in 2001, but it took Congress until March 2002 to pass the Economy Recovery Act to provide further inducement to theShow MoreRelatedEffect Of The Business Cycle Essay983 Words   |  4 PagesThis study uses time-series data from the CPS March data to investigate the effect of the business cycle from 2003 to 2014 on the wage differentials between females and males. The CPS is a monthly sample survey of approximately 60,000 households conducted by the Census Bureau for the Bureau of Labor Statistics, which can be considered as the primary source of labor force statistics for the population of the United States. This study also uses data from the Local Area Unemployment Statistics (LAU S)Read MoreDefinition Of Liabilities1623 Words   |  7 Pageswhich are we purchase product, service or take money in credit base and we can make a promise to creditors to we can pay those money in future. Overdraft When a person or business require money this time overdraft facility can be use. In this facility money is withdrawn from a bank account. In this facility a person or business withdraw money and the available balance goes below zero. In this situation call to be overdrawn. Provision for Income Taxes All provision is making for uncertain timingRead MoreThe Impact Of Neoclassical Economics On The Economy Essay1344 Words   |  6 Pagesboth the private sector (households and privately owned businesses) and public sector (government) have an active and important role in the economy. He argued that in a capitalist economy, the government would have a direct response to where in a business cycle the economy was at any particular time—Borrow to spend in a Recession or Bust, and spend only to the level of revenue collected during a period of growth or Booms. Milton Friedman, an American economist, believed strongly in a neoclassical, one-directionalRead MoreBusiness Cycle Theories : A General Comparison1625 Words   |  7 Pages Business Cycle Theories: A General Comparison Maria Sciarrino Niagara University ECO101HON â€Æ' Business Cycle Theories: A General Comparison Throughout history, economies have experienced times of high growth and low unemployment as well as times of little or negative growth and high unemployment. It is controversial whether or not these instances occurred from regular fluctuations in the market. These alternating up and down fluctuations typically occur over several years, with each individualRead MoreMexico Business Cycle1260 Words   |  6 PagesMexico’s Business Cycle The term business cycle or economic cycle refers to the fluctuations of economic activity around its long-term growth trend. It involves shifts over time between periods of relatively rapid growth of output-recovery and prosperity, and periods of relative stagnation or decline- contraction or recession. These fluctuations are often measured using real gdp. Despite being termed cycles, these fluctuations in economic growth and decline do not follow a purely mechanicalRead MoreBusiness Cycles Macro Economic Conditions And Its Impact Towards The Country1396 Words   |  6 Pages Economics for Business Essay Question Lecture Name - Maruf Mostafa Student Name - Wastu Kankanamalage Gayani Chathurangi Maithripala Student ID – 11621711 Word Count – 1000 Introduction This essay will mainly focus, discussing business cycles in macro-economic conditions and their impact towards the country. The first part of the essay will describe different economic conditions within the macro-economic such as an economy boom and recession. The argument will bring out some definitionsRead MoreDoes Oil Price Shocks Affect Business Cycles?994 Words   |  4 PagesIt is often said that oil price shocks affect business cycles, triggering a detrimental effect on the economic activity of some countries when they rise and a favourable effect when they fall. 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Each of these stages of product life cycle requires a different marketing mix and research. The life of a product is the period over which it appeals to customers. The sales performance