Business Cycle (or Trade Cycle) is split into the following four stages :-Prosperity Phase : Expansion or Boom or Upswing of overall economy. Recession Phase : from success to downturn (upper turning point). Depression Phase : Contraction or Downswing of overall economy. Recovery Phase : from depression to prosperity (lower turning Point). The business enterprise cycle starts from a trough (lower point) and goes by through a recovery phase followed by a period of extension (top turning point) and success.

After the top point is reached there’s a declining stage of recession accompanied by a depression. Again the business enterprise routine continues likewise with fluctuations. When there can be an expansion of output, income, employment, prices and profits, there is a rise in the standard of living also. This era is referred to as Prosperity phase.

The top features of wealth are :-1. Higher level of result and trade. 2. Higher level of effective demand. 3. Higher level of income and employment. 4. Rising interest levels. 6. Large growth of bank or investment company credit. 7. Overall business optimism. 8. A high level of MEC (Marginal efficiency of capital) and investment. Due to full work of resources, the amount of creation is Maximum and there’s a rise in GNP (Gross National Product). Due to a high degree of economic activity, it causes a growth in prices and earnings.

There is an upswing in the financial activity and overall economy reaches its Peak. This is also known as as a Boom Period. The turning point from prosperity to depression is termed as Recession Phase. During a recession period, the financial activities slow down. When demand starts falling, the overproduction and future investment plans are also given up.

There is a reliable decrease in the result, income, employment, profits and prices. The businessmen lose confidence and be pessimistic (Negative). It reduces investment. The banks and the cultural people make an effort to get better liquidity, so credit also contracts. Expansion of business stops, currency markets falls. Orders are cancelled and people start losing their careers. The increase in unemployment causes a sharp decline in income and aggregate demand.

  • 1 Kepand (2015) — Privatized
  • Business Succession Planning
  • 254 Some North Street
  • 70 Progress Energy, Inc. (NYSE:PGN) -22.0% 37.79 48.43

Generally, recession continues for a short period. When there is a continuous loss of output, income, work, prices and earnings, there is a fall in the standard of living and unhappiness units in. The features of depressive disorder are :-1. Fall in level of output and trade. 2. Fall in income and rise in unemployment.

3. Decrease popular and consumption. 4. Fall in interest. 6. Contraction of bank or investment company credit. 7. Overall business pessimism. 8. Fall in MEC (Marginal efficiency of capital) and investment. In major depression, there is under-utilization of resources and fall in GNP (Gross National Product). The aggregate financial activity reaches the lowest, leading to a decrease in prices and profits until the economy reaches its Trough (low point). The turning point from depressive disorder to enlargement is termed as Revival or Recovery Stage. Over recovery or revival, there are rise and expansions in economic activities. When demand starts rising, production increases and this causes an increase in investment.

There is a steady rise in result, income, employment, prices and income. The entrepreneurs gain confidence and become positive (Positive). This boosts investments. The excitement of investment results in the revival or recovery of the overall economy. The banks expand credit, business expansion takes place and stock markets are activated. There is an increase in employment, creation, income and aggregate demand, prices and income start increasing, and business expands. Revival emerges into wealth gradually, and the business cycle is repeated.