business cycle 2

A detailed Summary of business cycle 2


In everyday society, companies are affected by the economy. The company either suffers or benefits depending on what kind of economy it is. This will depend on what kind of company it is, and what kind of market the business does well in. The Business Cycle is what determines this factor. It is a term used in economics to designate changes in the economy.

Timing of the business cycle is not predictable, but its phases seem to be. Many economists site four phases-prosperity, liquidation, depression, and recovery. During a period of prosperity, a rise in production leads to increases in employment, wages, and profits. Obstacles then begin to obstruct further expansion. Production costs can increase, helping create a rise in prices, and consumers buy less. Inventories accumulate, causing price declines. Manufacturers begin to diminish; workers are laid off. Such factors lead to a period of liquidation, and money is hoarded, not invested. Production cutbacks and factory shutdowns occur. Unemployment becomes widespread. A depression is in progress. Recovery may be initiated by a reawakening in consumer demand or government action to stimulate the economy. Prices rise more rapidly than costs. Employment increases, and people buy more.


The Business cycle theory matters simply because many people believe business cycles exist. This has not been a permanent belief. In the 19th century, business cycles were not thought of as cycles at all but rather as spells of "crises" interrupting the smooth development of the economy. In later years, economists and non- economists alike began believing in the regularity of such crises, analyzing how they were spaced apart and associated with changing economic structures. In society, there is a saying "history always repeats itself". That is what the business cycle is, a repetition of a cycle that has been going on for ages, from recession to recoveries to expansions and back again. It is something that will never end and will not stop recurring.

jewelry is not a necessity in life, so people can choose if they want it or not. In today's market where most people are employed and people have additional money, Tiffany profits. People tend to buy the better things in life when they know they have an abundance of money .

FannieMae is a company that makes capital by lending money to people who need mortgages and by borrowing money at low interest rates. FannieMae is able to make money in any kind of economy

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Approximate Word count = 818
Approximate Pages = 3 (250 words per page double spaced)

Category: Miscellaneous

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