Essay Cycles of Business
A look at the different phases in the business cycle.
This paper explains how the business cycle is actually the logical growth and fall of the economy and is determined by many factors like demand, supply, buying power and cost of the commodity. The paper discusses the prosperity phase, liquidation phase, depression phase and recovery phase, and points out how the government, by enacting fiscal policies, also has a major role in stabilizing the economy. The paper also outlines the theories that explain the business cycle and explains how they emphasize the role of market dynamics in expanding or contracting the economy.
“Typically businesses do not register a constant growth or decline. Ideally it shows a wavy nature in its growth. Similarly economies also do not have a constant growth or decline and it definitely registers a growth phase and a lag phase which alternate between each other. A business cycle is the recurring expansions and contractions of the national economy. A complete cycle lasts anywhere between three to five years. We can see that the business cycle follows a logical growth and decline of the economy and is in accordance with the principle laws of business management that emphasizes that every business has a life cycle. The buying and selling pattern and the demand for a particular commodity are some of the factors that affect the business cycle.”