Thursday, February 4, 2010

what is trade cycle

what is trade cycle
In a free and capitalistic economy national income ,employment level, price level along with their determinant factor keep on changing from time to time. Therefore various economic ups and downs are the normal phenomena of the free economy. That is, like various waves and tides in the sea. the situations of prosperity and depression keep on occurring in the free and capitalistic economy. in the situation of prosperity in the economy,the economy development will be in the positive direction and in the state of depletion , but the economic development will be in the negative direction. That is, in the state of prosperity output employment income price level etc. all will increase while in the state of depression, discouraging environment will overshadow all economic activities including output, employment, price level , etc. will decrees. The changes of state seen in the economy is known as trade cycle. Accidental, natural, climatic, political, etc. factor cause trade cycle to occur in the economy. such cyclical fluctuation occur regularly in the economy.
The ups and down of economic activities are known as business cycle's. such fluctuations greatly affect the economic actives such as output, employment, income, price, demand etc. In general, trade cycle created in one sector fully affects the whole economy. but sometimes only sector or one industry is affected and this is known as specific cycle.

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