trade cycle
above video is explains you trade cycle. Trade cycle is one of the important part of macroeconomics. So watch this video till end.
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TRADE CYCLE - A trade cycle is composed of periods of Good Trade, characterized by rising prices and low unemployment percentages, shifting with periods of bad trade characterized by falling prices and high unemployment percentages.
The characteristics or features of trade cycle are :-
1- Movement in Economic Activity : A trade cycle is a wave-like movement in economic activity showing an upward trend and a downward trend in the economy.
2- Periodical : Trade cycles occur periodically but they do not show the same regularity.
3- Different Phases : Trade cycles have different phases such as Prosperity, Recession, Depression and Recovery.
4- Different Types : There are minor and major trade cycles. Minor trade cycles operate for 3-4 years, while major trade cycles operate for 4-8 years or more. Though trade cycles differ in timing, they have a common pattern of sequential phases.
5- Duration : The duration of trade cycles may vary from a minimum of 2 years to a maximum of 12 years.
6- Dynamic : Business cycles cause changes in all sectors of the economy. Fluctuations occur not only in production and income but also in other variables like employment, investment, consumption, rate of interest, price level, etc.
7- Phases are Cumulative : Expansion and contraction in a trade cycle are cumulative, in effect, i.e. increasing or decreasing progressively.
8- Uncertainty to businessmen : There is uncertainty in the economy, especially for the businessmen as profits fluctuate more than any other type of income.
9- International Nature : Trade Cycles are international in character. For e.g. Great Depression of 1930s.
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