A Business Cycle

2. Business Cycle –
Business Cycle Is The Fluctuations In Business
Activities Like Production, Pricing, Demand,
Employment, Income Of People, Profit Etc.
It Is A Continues Process

3. Definitions –
“Up & Down In The Business Activities Called
Business cycle.”
“Functions In The Business Activity Are Termed As
Business Cycle”.
“Alternations In The Period Of Prosperity &
Depression Is Called Business Cycle. ”

4. There Are Four Phases Generally In Business Cycle
Prosperity
Recession
Depression
Recovery

5. Business Cycle Is Good As Well As Bad For Org.
2.
Recession
3.
Depression
1.
Prosperity
4. Recovery
Good Time
Bad Time

6. Diagram Of Business Cycle

7. Prosperity –
This Phase Is Characterised By Good Trade In Which Production Activities
Are In The Full Swim/Swing.
Producers Offers Good Amount Of Jobs.
It Leads To Increase Income Level Of People Which Result In The Increase
Demand From Theme & Hence Profit Of Entrepreneur's Gets Increase
So This Phase Is Called As Phase Of Good Trade.
If The Business Activities, Production, Employment, Income, Demand, Profit,
Remains Continue For A Longer Period Of Time, It Will Lead To The Point Of
‘Peak’.

8. Recession –
Recession Is The Phase In Which Business Activities Slow Down.
Where Exploitation Of All Resources, Producers Don’t Have Any Scope To
Expand Their Production, Employment Opportunities Decreases, Leads To
Decrease In The Income Level Of People, Demand, Profit.
If This Phase Continuous For Longer Period Of Time, It Will Lead Economy
Towards The Phase Of Depression.

9. Depression –
Depression Is The Phase Of Eco, In Which Businessman Loss Their Hopes.
Due To The Drained Funds Banks Cannot Lend Credits To Producers Hence
Producers Can Not Start Production & It Leads To Unemployment, People
Don’t Have Jobs, Income, Demand, & Hence No Profit.

10. Recovery –
After The Phase Of Depression Govt. Start Taking Control Of Economic
Activities.
Central Bank Release More Money Into The Economy, Commercial Banks
Lends Their Ideal Funds At The Lower Interest Rate To Produces, Again Start
Their Production Slowly, People Start Getting Jobs & Demand Increases In
The
Economy & Economy Gets Recover From Depression.
Successful Recovery Leads Economy Towards The Phase Of Prosperity Again
& Business Cycle Gets Complete.

11. MONITORY THEORY
By – R. J. Hawtrey
Criticism -
Hawtrey doesn’t consider non-moneroty factors like , demand, competition,
govt.
Rules & Regulation etc. For Business Cycle That’s Why His Theory Tends To Be
Incomplete.
It Is Not Correct To Say Banks Are Responsible For Expansion & Contraction Of
Business Activities.
Hawtrey Has Over Emphasized The Role Of Bank System In Economy.
According To The Hawtrey If Banks Increase Interest Rate Producer Will Not
Demand Credit And Decrease The Production. Where As If Business Man Feel
That Feature Prospects Are There Even At The High Interest Rate They Will
Demand Credit & Continue The Product Activities.

12. NON – MONITORY THEORY
By J. Schumpetor
Criticism –
This Theory Is Based On The Wrong Assumption Of Full Employ Because In
Reality Full Employment Of Factors Of Production Isn’t Possible Hence It
Tends To Be
Non-Realistic Theory.
Like Hawtrey, Schumpetor Too Ignores Non-Monitory Factors For Business
Cycle.
Schumpetor Has More Emphasize The Role Of Innovation In The Economic
Activities Where As Critics Opine That Business Cycle Will Not Operate Only
Because Of Innovation.