The Great Depression of 1929 is an example of this. Incomes of shareholders go down fast. This movement will persist till the forces accumulate to alter the direction and create the downward movement. Which statement best describes why it is difficult to sell a home during a recession? Monopolies can afford to invest in latest technology and machinery in order to be efficient and to avoid competition. Thus, everyone seems to be happy during the state of prosperity which ultimately, of course, proves to be short-lived. Check all that apply. Industrial and commercial activity, both speculative and non-speculative, shows remarkable expansion. Let us discuss its features / characteristics in detail. Recovery Phase : from depression to prosperity (lower turning Point). Study for free with our range of university lectures! Monopolistically competitive firms are assumed to be. Every phase has germs of the next phase, that is, expansion has the germs of the recession in it. The whole process becomes self-reinforcing. Automatic Stabilizer: The tax structure and expenditure are programmed in such a way that there is increase in expenditure and decrease in tax in recession and decrease in expenditure and increase in tax revenue in the period of inflation. First-degree price discrimination is an attempt by the seller to leave the price unannounced in advance and charge each customer the highest price they would be willing to pay for the purchase. As a result, purchasing power of workers, who form a majority of the people, tends to lag behind the supply of consumer goods. Which best describes the nature of cause and effect in the context of the business cycle? Differentiation through distribution, including distribution via mail order or through internet shopping, such as, which differentiates itself from traditional bookstores by selling online. Fluctuations in output and employment will be greater in capital goods industries than in consumption goods Industries. The phases are:  1. Generally, prices and production fall or rise together. This replacement demand starts the recovery process. Recession Phase: from prosperity to recession (upper turning point). C. Car dealerships cannot sell their stock. All three are displayed in the table to the right. This forces the producers to meet their contractual obligations through unintended sales of their inventories in a market where prices are already declining. One justification for this practice is that producing goods and services for sale to one identifiable group of customers is less than the cost of sales to another group of customers. The economy is growing again. This reduces the deposits with banks and other financial institutions. The Business cycles occur periodically in a regular fashion. For many goods, the length of the product cycle is shrinking. Check all that apply. If you are proficient with spreadsheet programs, you can chart data points and insert a trend line over the data. Ans: The business cycle is the periodic but irregular up-and-down movements in economic activity, measured by fluctuations in real GDP and other macroeconomic variables.Diagram of Business Cycle (or Trade Cycle) :-. Common methods of advertising for these firms are through local press and radio, local cinema, posters, leaflets and special promotions. This means that the ideals of full employment of the labour force and full utilisation of productive capacity are realized in the prosperity phase. stagnant prices high levels of production ambivalence about the economy reduced incomes - The Business cycles occur periodically in a regular fashion. I’ll see if I hate you or like you. (adsbygoogle = window.adsbygoogle || []).push({}); What are the Characteristics of Business Cycle? 1. depression. Proportional tax: When the tax imposed is irrespective of the income you earn, every income group, high or low pay the same amount of tax. There is a steady rise in output, income, employment, prices and profits. You can view samples of our professional work here. In this way, as M. W. Lee has remarked, “a recession, once started, tends to build upon itself much as forest fire. For example, a publisher of music or books may be able to sell a music album or a book in electronic form for less cost than a physical form like a compact disc or printed text. Recover)’ is a slow and halting process. According to Keynes, prosperity phase of business cycle comes to end fast but dip is gradual and slow. Marketing differentiation, where firms try to differentiate their product by distinctive packaging and other promotional techniques. Answer or comment. Why might buying a home during a recession be a good decision for some consumers? The end to prosperity phase comes because of certain tendencies in the private-enterprise economy prevalent during the boom conditions. The fall in the purchasing power of the general public reduces demand for consumer goods which aggravates the slackening demand for machines and equipment. Ans : Economic forecasting is the process of making predictions about the economy. The other two are profit maximization (if price exceeds average total cost) and loss minimization (if price is greater than average variable cost but less than average total cost). When a downward movement starts, it persists in the same direction leading to the worst depression and stagnation till it is retrieved to gain an upward movement. Join now. There are usually a large numbers of independent firms competing in the market. But there need not be uniformity in the extent and magnitude. Share markets reflect the general state of exuberation of the investors. 4. Phases 4. 1. Business cycle occurs Periodically. Which of the following is a characteristic of the prosperity phase of the business cycle? - 15626481 1. During a recession period, the economic activities slow down. Each producer can set its price and quantity without affecting the market place as a whole. 3. ! A central feature of monopolistic competition is that products are differentiated. What is the characteristic of the prosperity phase of the business cycle? These phases of business cycles are shown in the following: 1. Secondly, expansion of production is hampered by shortages of some inputs and bottlenecks in production. However, they cannot fully appreciate the restaurant or the meal until after they have dined. Fourthly, the non-availability of credit beyond a particular rate of expansion might also act as a serious break on prosperity. Once underway, it tends to create its own drafts and give internal impetus to its destructive ability”. This is one of three short-run production alternatives facing a firm. For example, small businesses in construction-related work can look to housing starts, building permits, loan applications and interest rates for solid indicators of the future. The banks and the people try to get greater liquidity, so credit also contracts. ... the characteristic features of a depression are the reverse of prosperity: ... A business cycle is a complex phenomenon which embraces the entire economic system. The reason is, with falling prices of agricultural commodities, the farmers would try to produce more to offset the loss of falling prices of their produce and maintain the same level of income. B. There is a state of exuberance and enthusiasm in the business community. 1. …. Fluctuations will spread throughout, as industries are interconnected and the cyclical fluctuations tend to be international in the sense that the prosperity or adversity will affect the foreign countries, through international trade. Agricultural Extension Services and other state agencies provide complementary data.

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