FEATURES OF BUSINESS CYCLE

FEATURES OF BUSINESS CYCLES

Diuerent business cycles diuer in duration and intensity. But there are certain features which they commonly exhibit:

(a) Business cycles occur periodically although they do not exhibit the same regularity. The duration of these cycles vary. The intensity of fluctuations also varies.

(b) Business cycles have distinct phases of expansion, peak, contraction and trough. These phases seldom display smoothness and regularity. The length of each phase is also not definite.

(c) Business cycles generally originate in free market economies. They are pervasive as well. Disturbances in one or more sectors get easily transmitted to all other sectors.

(d) Although all sectors are adversely auected by business cycles, some sectors such as capital goods industries, durable consumer goods industry etc, are disproportionately auected. Moreover, compared to agricultural sector, the industrials sector is more prone to the adverse euects of trade cycles.

(e) Business cycles are exceedingly complex phenomena; they do not have uniform characteristics and causes. They are caused by varying factors. Therefore, it is diflcult to make an accurate prediction of trade cycles before their occurrence.

(f) Repercussions of business cycles get simultaneously felt on nearly all economic variables viz. output, employment, investment, consumption, interest, trade and price levels.

(g) Business cycles are contagious and are international in character. They begin in one country and mostly spread to other countries through trade relations. For example, the great depression of 1930s in the USA and Great Britain auected almost all the countries, especially the capitalist countries of the world.

(h) Business cycles have serious consequences on the well being of the society.