Features OF Business Cycle is very effective for capitalist economy.It would be very helpful for those who are researching the system of business cycle in an ongoing economy crises. Following are some proven features.
Cover the Whole Economy
Ups and downs of trade cycle are regular and cover all the sectors of the economy. Temporary and partial fluctuations are not considered as trade cycle.
Time Period is not Fixed
A trade cycle may complete its phases in a period of 5 to 10 years. Sometime this period may extend to more than 10 years or decrease to less than 5 years.
International in Nature
Countries of the world are closely connected with each other through international trade. Prosperity or depression in one part of the world will be transferred to other parts. There fore if there is depression in a big economy, it may cause depression in many countries of the world.
Recovery is Slow But Recession is abrupt and speedy.
The trough of depression contains the germs of recovery and the boom of expansion contains the germs of recession. But it has been observed the usually recovery is slow but speed of recession is fast.
A feature of Capitalistic Economy
No doubt the whole world is affected by economic fluctuations but originally the fluctuation start from capitalistic economies. This is because all economic activities are controlled by working together of demand and supply. When due to any ‘reason these forces do not function freely then economic disturbance starts. Further Industrial sector is more sensitive to trade cycle than agriculture sector.
Features of Business Cycle Is Bound To Make An Impact In Your Business
Difference in Intensity
During the phases of depression and prosperity, all sectors of the economies are affected but the effect is not same. For example, capital goods producing industries suffer more.
Pervading in Nature
When an important sector of the economy suffers from depression, it definitely affects other sectors of the economy. The action and reaction of economic events takes place in such a way that whole of the economy is suffered. Similarly a sign of expansion some important sector of economy becomes a hope for the revival of the whole economy.
Complex in Nature
Important feature of trade cycles is that they represent a very complex phenomenon, which is caused by many factors. This is why all trade cycles do not have uniform characteristic and causes. Due to this reason it is difficult to make accurate prediction of trade cycles before their occurrence.
Setting Within Long Run Growth Trend
As a market economy grows over a long period of time, the peak level of every next trade cycle occurs at a higher level of national income than the previous trade cycle.
Economic and Social Effects.
The effects of trade cycles are not limited to economic activities only rather they have serious social consequences as well. It affects behavior of people, and crime rate etc.