business cycle
business cycle
business cycle
busi′ness cy`cle
n.
business cycle
Noun | 1. | business cycle - recurring fluctuations in economic activity consisting of recession and recovery and growth and decline |
单词 | business cycle | |||
释义 | business cyclebusiness cyclebusiness cyclebusi′ness cy`clen. business cycle
business cycleBusiness cycleBusiness Cyclebusiness cyclebusiness cyclefluctuations in the level of business activity in an economy brought about by changes in demand conditions, particularly increases and decreases in investment spending. The business cycle is characterized by four phases, with the economy moving upwards from ‘depression’ through ‘recovery’ to ‘boom’ and back through ‘recession’ to depression once again. The depression stage of the cycle is characterized by a very low level of demand relative to supply capacity, accompanied by low levels of output, unsold stock and high unemployment. As demand picks up in the recovery stage, stock levels fall and output and employment increases. Boom conditions are characterized by full-capacity levels of output and employment, but with a tendency for the economy to ‘overheat’, producing inflationary pressures. The ending of a boom is followed by a period of recession, with falling demand leading to modest falls in output and employment at first but then accelerating into depression as demand continues to fall. In practice, however, governments attempt to use anticyclical FISCAL POLICY and MONETARY POLICY to stabilize the economy, aiming in general to keep total demand in balance with the supply capabilities of the economy thus avoiding undesirable output- and employment-losses as well as containing inflation. See ECONOMIC POLICY.business cycleortrade cyclefluctuations in the level of economic activity (ACTUAL GROSS NATIONAL PRODUCT), alternating between periods of depression and boom conditions.The business cycle is characterized by four phases (see Fig. 20 ):
What causes the economy to fluctuate in this way? One prominent factor is the volatility of FIXED INVESTMENT and INVENTORY INVESTMENT expenditures (the investment cycle), which are themselves a function of businesses’ EXPECTATIONS about future demand. At the top of the cycle, income begins to level off and investment in new supply capacity finally ‘catches up’ with demand (see ACCELERATOR). This causes a reduction in INDUCED INVESTMENT and, via contracting MULTIPLIER effects, leads to a fall in national income, which reduces investment even further. At the bottom of the depression, investment may rise exogenously (because, for example, of the introduction of new technologies) or through the revival of REPLACEMENT INVESTMENT. In this case, the increase in investment spending will, via expansionary multiplier effects, lead to an increase in national income and a greater volume of induced investment. See also DEMAND MANAGEMENT, KONDRATIEF CYCLE, SECULAR STAGNATION. business cycle
Synonyms for business cycle
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