Business Cycle Essay Business Cycle. ASSIGNMENT 1 Introduction In macroeconomics, business cycle played an important role to show what a Business Cycle Essay. The company either suffers or benefits depending on what kind of economy it is. This will depend The Four Stages Of The Business The Business Cycle The business cycle relates to repetitive fluctuations of expansion and recession in an economy. Over the longer term an economy would normally experience a positive growth in output. Therefore, the business cycle can be defined as the ‘short-term fluctuation of total output around its trend path’ (Begg et al, , ) 4/10/ · “Business cycles are a type of fluctuation found in the aggregate economic activity of nations that organize their work mainly in business enterprises: a cycle consists of expansions occurring at about the same time in many economic activities, followed by similarly general recessions, contractions, and revivals which merge into the expanding phase of the Estimated Reading Time: 8 mins
Essay on Business Cycle - Words
Abstract Business cycle has four fluctuations that it exhibits. This is because an economy cannot be said to on a steady growth throughout the period. Therefore, during periods business cycle essay lots of economic activities such as investments, a country would witness a boom hence expand on its growth. However, during low economic activities, an economy slides towards recession hence contraction in the economy.
In this study, we look at business cycle in US and at what stage it is at the moment, business cycle essay. Business Cycle; GDP Growth, Inflation and Unemployment Business Cycle This refers to the fluctuations in economic activities especially in production over a certain period of time usually months and to some extent years. It involves the economy witnessing a boom in production over a certain period of time and shifting to a recession during some other period of time characterized with low Economic activities.
Economic growth is not a steady occurrence but rather involve fluctuations that are exhibited through the business cycle.
Therefore, during growth, an economy would undergo the following fluctuations; an expansion, a peak, contraction recessionand a trough low point.
The diagram below illustrates the fluctuations in a business cycle. There are various economic variables that are used as business cycle essay of business cycle. Among them is the Gross Domestic Product GDP. However, it has been argued that GDP which is a quick and simple indicator of a contraction in an economy and that it does not provide sufficient data due to regular revision made to it.
Therefore, other indicators have been proposed business cycle essay be used concurrently with it. They include employment rate, inflation rate and industrial production. From December to date, the US economy has been in a recession due to low economic activities and the global financial crisis that affected major economies of the world US inclusive. Gross Domestic Product Gross Domestic Product GDP refers to total output of goods and services produced in a country in business cycle essay given period of time.
During the fourth quarter ofGDP in the United States decreased at annual rate of 3. According to Bureau of Economic Analysis; real GDP of the third quarter decreased by 0. However, business cycle essay, the data on fourth quarter estimates is based on incomplete data and a comprehensive estimate for the fourth quarter is set to be released on 27th February that would be based on a more comprehensive data. Business cycle essay in GDP in the fourth quarter is mainly attributed to low exports as a result of decrease in production, negative contribution of personal consumption spending and negative contribution of residential fixed investment.
In addition, imports also decreased significantly. All these factors combined led to the decrease business cycle essay GDP in US during the third and fourth quarter of the Bureau of Economic Analysis Unemployment rate According to Bureau of labor statistics, the unemployment was as high as 7.
Business cycle essay the past one year, unemployment rate is said to have risen by 2. Among the unemployed persons, those who lost their jobs and temporary workers increased to 7 business cycle essay. This tremendous fall in employment indicates that the economy is business cycle essay a recession contraction as shown in the business cycle. Since the beginning of recession in latepayroll employment has reduced by 3.
Inflation rates Inflation rates are normally computed using consumer price index and producer price index. In the second quarter ofprices for goods and services rose sharply.
On computation, Bureau of Economic Analysis found out that, gross purchase price index and personal consumption expenditure rose by 4. On the other hand, consumer price index CPI a measure of inflation indicated that CPI had grown by 5. This therefore produced a multiple effect to lead to a slow down in economic activities and therefore indicated that the country was falling into further recession, business cycle essay.
Implication to companies; Wal-Mart and Starbucks As a result of the current recession in the US, most companies sales have business cycle essay affected significantly thereby reducing on their annual profits. Consequently, they have opted to reduce on their cost of production in circumstances where they incur loses.
This means that they reduce on their employees as a faster response to high cost of production, business cycle essay. A case in point is Wal-Mart, the world largest retailer that has been able to successful fight recession but as the recession persists, they have promised to cut on their employees by This is an indication that their cost has increased and need to be reduced to some level for them to stay in business.
Another retailer FedEx also plans to cut down on its employees by people, business cycle essay. Basically, want this means is; reduction business cycle essay GDP results into slow down in economic activities and as a result, production would be low in all sector of the economy. This consequently reduces on consumption that further reduces the production of those commodities and cutting off of employees for firms to maintain low cost of production.
Starbucks, has not been left behind, with the occurrence of recession, business cycle essay, Starbucks has embarked on closing some of its store.
This is a historical phenomenon in Starbucks history since it has never succumbed to recession. However, due to decrease in demand as a result of high inflation that has reduced the disposal incomes of consumers, Starbuck had to cut on its cost by closing down some of its store. Profits decline due to low sales and hence need to reduce on production.
Therefore, business cycle essay, it can be clearly asserted basing on the indicators of business circle that US is actually in recession. Inflation measured using consumer price index in January indicate that CPI for urban consumers increased by 0. This implies that inflation is still rising in US.
The unemployment rate has also surged to a historic high thereby indicating the country is in recession. References Bureau of Economic Analysis. Gross Domestic Product: Fourth Quarter gov Bureau of Labor Statistics. Overview of BLS Statistics on Inflation and Prices. Delivering a high-quality product at a reasonable price is not enough anymore. This describes us perfectly. Make sure that this business cycle essay is totally transparent.
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What Are Economic Cycles?
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Looking for Business Cycle essay examples? On EssayIntl you can download any Business Cycle essay for free! Get inspired by student examples 24/8/ · Introduction In macroeconomics, business cycle played an important role to show what a national economy is going; therefore, this essay will define what business cycle is and its characteristics Business Cycle Essay Business Cycle. ASSIGNMENT 1 Introduction In macroeconomics, business cycle played an important role to show what a Business Cycle Essay. The company either suffers or benefits depending on what kind of economy it is. This will depend The Four Stages Of The Business
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