/ Economics / This presentation includes a deep understanding of what Balance of Payment and Business Cycle are. BoP is the sum up of all exchanges that a nation’s people, organization, and government bodies toral with people, organizations, and government bodies outside the country.

1. Neha Nidhi Akanksha Chaurasia
Rakshit Vyas Vaibhav Kathait
Abhishek Gupta Aditya kumar
Tushant Tyagi
balanceofpayment
&
Businesscycle

2. 01
Introduction
03
Importance
02
components
04
deficit or surplus
05
Bop crisis
06
BOP vs BOT
Balance of Payment

3. ● BoP is the sum up of all exchanges that a nation’s people,
organization, and government bodies toral with people,
organizations, and government bodies outside the country.
● According to the Reserve Bank of India, BoP of a country is
the systematic report of all economic transactions between the
resident of the country and the rest of the world.
● BoP also called as the equilibrium of global installments.
INTRODUCTION

4. SomeKeyfeatures
● These exchanges comprise imports and commodities of products, administrations
and capital.
● It is a double entry system of record of all economic transactions between the
residents of the country and the rest of the world carried out in a specific period of
time.
● It includes all transactions, visible as well as invisible.
● It adopts a double-entry bookkeeping system. It has two sides: credit side and debit
side. Receipts are recorded on the credit side and payments on the debit side.
when we say “a country’s balance of payments” we are referring to the
transactions of its citizens and government

5. components
Balance of Payment is made up of 3
components:
● Current Account
● Capital Account
● Financial account

6. Current account
● This account deals with inflow and outflow of goods and services
between countries.
● It covers all the receipts and payments made with respect to raw
materials and manufactured goods.
● It also includes receipts from engineering, tourism, transportation,
business services, stocks and royalties from patents and
copyrights.
● When all the goods and services are combined, they make up a
country’s Balance Of Trade.

7. Capitalaccount
● Capital account deals with foreign exchange reserves, investments, loans &
borrowings.
● It include purchasing and selling assets (non- financial) like land and properties.
● There are three major elements of a Capital account:
○ Loans and borrowing - It includes all types of loans from private and
public sectors located in foreign countries.
○ Investments - These are funds invested in corporate stocks by
non-residents.
○ Foreign exchange reserves - It is held by the country’s central bank to
monitor and control the exchange rate to impact the capital account.

8. financialaccount
● The flow of funds from and to foreign countries through various
investments in real estate, business ventures, foreign direct investments
etc., is monitored through the financial account.
● This account measures the changes in the foreign ownership of domestic
assets and domestic ownership of foreign assets.
● Analysing these changes can be understood if the country is selling or
acquiring more assets (like gold, stocks, equity, etc.).

9. importance
● BOP records all the transactions that create demand for and supply
of a currency.
● Judge economic and financial status of a country in the short-term
BoP may confirm trend in economy’s international trade and
exchange rate of the currency. This may also indicate change or
reversal in the trend.
● It assists the public authority with assessing the expense rates for
commodities and imports.
● It assists the Government with breaking down a specific industry
and forming strategies as per the needs.
● BOP may confirm trend in economy’s international trade and
exchange rate of the currency. This may also indicate change or
reversal in the trend.

10. ‘’ A disequilibrium in the balance of payment
means its condition of Surplus Or deficit ‘’
● A Surplus in the BOP occurs when Total Receipts
exceeds Total Payments. Thus,
BOP= CREDIT>DEBIT
● A Deficit in the BOP occurs when Total Payments
exceeds Total Receipts. Thus,
BOP= CREDIT<DEBIT
Deficitorsurplus

11. Causeof
disequilibrium
● Short fall in the exports
● Economic Development
● Rapid increase in Population
● Natural Calamities
● Cyclical fluctuation
● International Capital Movements

12. Measurestocorrectdisequilibriuminbop
Monetary Measures
➔ Monetary Policy
➔ Fiscal Policy
➔ Exchange Rate Depreciation
➔ Devaluation
➔ Deflation
➔ Exchange Control
Non - Monetary Measures
➔ Export Promotion
➔ Import Substitutes
➔ Import Control

13. Bopcrisis
● Short fall in the exports
● Economic Development
● Rapid increase in Population
● Natural Calamities
● Cyclical fluctuation
● International Capital Movements

14. BOP vs bot

15. conclusion

16. BUSSINESSCYCLE

17. INTRODUCTION
Business cycles are intervals of expansion followed
by recession in economic activity. These changes
have implications for the welfare of the broad
population as well as for private institutions
03
01
04
There are numerous sources of business cycle
movements such as rapid and significant changes in
the price of oil or variation in consumer sentiment
that affects overall spending in the macroeconomy
and thus investment and firms' profits.
The classical cycle refers to rises and falls in
total production. The growth cycle is concerned
with fluctuations in the growth rate of
production.
02
Business cycle fluctuations are usually
characterized by general upswings and
downturns in a span of macroeconomic
variables..

18. FEATURE
❖ OCCURS PERIODICALLY
❖ MAJOR SECTORS ARE AFFECTED
❖ PROFIT VARIATION
❖ WORLDWIDE IMPACT
❖ WAVE LIKE MOVEMENT
❖ REPETITIVE FLUCTUATION
❖ LACK OF SYMMETRY
❖ NO FIXED TIME INTERVAL
❖ ECONOMY WIDE PHENOMENON

19. CAUSES
● EXPANSION AND CONTRACTION OF LOANS
BYS BANKS.
● CHANGE IN VOLUME OF INVESTMENTS.
● UNDER CONSUMPTION OR EXCESSIVE SAVING.
● LACK OF ADJUSTMENTS BETWEEN DEMAND
AND SUPPLY.
● FELLING OF ENTREPRENEUR.

20. PHASES
The 6 phases of business life-cycle are
1.Expansion
2.Peak
3.Recession
4. Depression
5.Trough
6.Recovery

21. Expansion
The first stage in the business cycle is expansion. In this stage,
there is an increase in positive economic indicators such as
employment, income, output, wages, profits, demand, and
supply of goods and services

22. Peak
The economy then reaches a saturation point, or
peak, which is the second stage of the business
cycle. The maximum limit of growth is attained.
The economic indicators do not grow further and
are at their highest. Prices are at their peak.

23. Recession
The recession is the stage that follows the peak phase. The demand
for goods and services starts declining rapidly and steadily in this
phase.

24. Depression
There is a commensurate rise in unemployment. The growth in the
economy continues to decline, and as this falls below the steady growth
line, the stage is called a depression.

25. Trough
In the depression stage, the economy’s growth
rate becomes negative. There is further decline
until the prices of factors, as well as the demand
and supply of goods and services, contract to
reach their lowest point.

26. Recovery
After the trough, the economy moves to the stage
of recovery. In this phase, there is a turnaround in
the economy, and it begins to recover from the
negative growth rate. Demand starts to pick up
due to low prices and, consequently, supply
begins to increase. The population develops a
positive attitude towards investment and
employment and production starts increasing.