1. Business Cycle Sriparnika Batra Prerna SanotraJimmy Narang Arnav

2. The term business cycle refers to economy-wide fluctuations in productionor economic activity over several months or years. These fluctuations occur around a long-term growth trend, and typically involveshifts over time between periods of relatively rapid economic growth ( boom), and periods of relative stagnation or decline (recession). 3. Business cycles are usually measuredby considering the growth rate of realgross domestic product. Despite being termed cycles, these fluctuations in economic activity do notfollow a mechanical or predictableperiodic pattern 4. Stages of Business Cycle Boom Depression or contraction. Recession Recovery or expansion. 5. Duration of Business Cycle Minor cycle 1 to 3 years Major Cycle 8 to 10 years Very Long Cycle 50 60 years 6. Theories of Business cycle 7. Climate Theory This theory divides into: Good weather Bad weather Example:When all the parameters of the business cycle are on higher level, its a good weather. And if all the parameters start sliding down, theweather is said to be bad. 8. Psychological Theory This theory divides into: Pessimist mindset. Optimist mindset. Example:When the mood of the market is positive and based on the parameters the growth is higher, its optimistic mindset. On the other hand when the mood is negative and expectations are low themindset is pessimistic. 9. Innovation Theory New invention (More profit)Innovation (50) earlier (450) followingResult depression 10. Under consumption theory / Under saving This theory is derived from demand, When the supply is more and demand is less, it isunder consumption and leads to stock pilingwhich in turn reduces the prices and brings in the recession. 11. Over investment theory This theory has the base as investment,If the investment required is 5 lakhs and invested is8 lakhs, the return of investment will be lower. Leading to recession. 12. Purely monetary policy Based on money supplyMarket supply is high everything upwardsMarket supply is downwards depression 13. Keynesian Theory Based on marginal efficiency of capital (MEC) More MEC (+) you must invest in your business ,economy is towards boom.Less MEC (-) Depression. 14. Parameters of Business cyclePhase Boom Depression Recession RecoveryEmploymentOutputWagesPricesInterestBank creditCost ofproductionStockFeeling ofindustry