Trade Cycles (Gr i)

7/27/2019 Trade Cycles (Gr i)

1/24

1

WELCOME

TRADE CYCLES-CONCEPTS- EFFECTS-CONTROL-INFLATION,DEFLATION

BY

D.B.NAIDU


2/24

2

DEFINITION

Trade Cycles are just the name of

Prosperity and Adversity; good tradeand bad trade

Hebeler


3/24

3

Contd..

Trade Cycle are the fluxuations in the aggregateeconomic activity. Any trade cycle starts from

depression,enters into revival, then converts itself

into boom and finally turns into recession.

W.C.Mitchel


4/24

4

PHASES OF A TRADE CYCLE

A typical cycle is generally divided into four phases: -

1. Expansion or Prosperity or the Upswing

(Boom)2. Recession or Upper-Turning Point

(Contraction)

3.Depression or Downswing (Trough)

4. Revival or Recovery or Lower turning point.


5/24

5

PHASES OF TRADE CYCLE


6/24

6

PHASES OF TRADE CYCLE


7/24

7

ECONOMIC ACTIVITY IN THE US

19542005

Deviations from the long term growth trend US 1954 2005
http://en.wikipedia.org/wiki/File:Businesscycle_figure3.jpg


8/24

8

TYPES OF CYCLES

1. The Short Kitchin Cycle

2.The Long Jugler Cycle

3.The Very Long Kondratieff Cycle

4. Kuznets Cycle


9/24

9

PROPERTIES OF TRADE CYCLE

I. Aggregate Economic Activity.

II. The Period of Phases. III. The Nature of Diffusion of Effects.

IV. International in Nature.

V. Social Effect.


10/24

10

HOW CAN TRADE CYCLE BE REDUCED?

I. Fiscal Policy

II.Monetary Policy

III.Buffer Stock Schemes

IV.State Control of Private Investment


11/24

11

I.FISCAL MEASURES

Increase in Taxes

Decrease in Public Expenditures, and

Increase in Public Debt

During Inflation/Boom:


12/24

12

During Depression

Decrease in Taxes

Increase in Public Expenditures, and

Decrease in Public Debt

Contd


13/24

13

II. MONETARY MEASURES

Bank Rate Policy

Open Market System

Changes in Reserve Ratio


14/24

14

III.BUFFER STOCK SCHEMES

Official Purchase and sale of food grains

according to the market fluxuations


15/24

15

IV. STATE CONTROL OF

PRIVATE INVESTMENT

J.M.KEYNES VIEW MAY BE ADOPTABLE


16/24

16

WHY DID TRADE CYCLE APPEAR IN THE

ECONOMY?


17/24

17

THEORIES OF TRADE CYCLES

Sunspot Theory

Psychological Theory

Theory of Under Consumption

Hawtrey Theory of Trade Cycle

Schumpeters Theory of Trade Cycle Keynes Theory of Trade Cycle


18/24

18

INFLATION

Inflation is a situation where too much

money chases too few goods


19/24

19

THE EFFECTS OF INFLATION

1. Scarcity of Labour,raw material etc.,2. Rise in the rate of Interest

3. Failure of Consumption to rise due to rising prices.


20/24

20

DEFLATION/RECESSION

Deflation is an economic theory, which dealswith the general reduction in the price levels or in

the prices of a type of good or asset.


21/24

21

THE EFFECTS OF

DEFLATION/RECESSION

1. Exorbitant Credit Card Debt

2. Fewer Customersand Lower Income.3. Putting Your Mortgage in Jeopardy.

4. Cost of Essentials

5. Low Savings


22/24

22

THE CAUSES AND EFFECTS

OF CURRENT RECESSION

The two main reasons that attracted the

borrowers were low interests and huge fundsthat helped easy loans for people. With such

attractive promises, people took more and

more loans to build houses and invest

money.


23/24

23

THE EFFECTS IT HAD ON INDIA WERE

1) share markets were falling

2) The Indian currency got weakened against dollar

3) Banks faced huge shortage of funds and soon

collapsed


24/24

24

THANK YOU ALL

QUESTIONS PLEASEFriday, October 11, 2013

D.B.Naidu92480-05303

[email protected]
mailto:[email protected]:[email protected]

Trade Cycles (Gr i)

Documents

Transcript of Trade Cycles (Gr i)