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TRADE CYCLES-CONCEPTS- EFFECTSCONTROL-INFLATION,DEFLATION BY D.B.NAIDU

DEFINITION

Trade Cycles are just the name of Prosperity and Adversity; good trade and bad trade Hebeler

Contd..

Trade Cycle are the fluxuations in the aggregate

economic activity. Any trade cycle starts from depression,enters into revival, then converts itself into boom and finally turns into recession.

W.C.Mitchel

PHASES OF A TRADE CYCLE

A typical cycle is generally divided into four phases: -

1. Expansion or Prosperity or the Upswing (Boom) 2. Recession or Upper-Turning Point (Contraction) 3.Depression or Downswing (Trough) 4. Revival or Recovery or Lower turning point.
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PHASES OF TRADE CYCLE

PHASES OF TRADE CYCLE

ECONOMIC ACTIVITY IN THE US 19542005

Deviations from the long term growth trend US 19542005

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TYPES OF CYCLES

1. The Short Kitchin Cycle 2.The Long Jugler Cycle 3.The Very Long Kondratieff Cycle 4. Kuznets Cycle

PROPERTIES OF TRADE CYCLE

I. Aggregate Economic Activity. II. The Period of Phases. III. The Nature of Diffusion of Effects. IV. International in Nature. V. Social Effect.

HOW CAN TRADE CYCLE BE REDUCED?

I. Fiscal Policy II.Monetary Policy III.Buffer Stock Schemes IV.State Control of Private Investment

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I.FISCAL MEASURES
During Inflation/Boom:

Increase in Taxes Decrease in Public Expenditures, and Increase in Public Debt

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Contd

During Depression Decrease in Taxes Increase in Public Expenditures, and Decrease in Public Debt

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II. MONETARY MEASURES

Bank Rate Policy Open Market System Changes in Reserve Ratio

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III.BUFFER STOCK SCHEMES

Official Purchase and sale of food grains according to the market fluxuations

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IV. STATE CONTROL OF PRIVATE INVESTMENT

J.M.KEYNES VIEW MAY BE ADOPTABLE

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WHY DID TRADE CYCLE APPEAR IN THE ECONOMY?

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THEORIES OF TRADE CYCLES

Sunspot Theory Psychological Theory Theory of Under Consumption Hawtrey Theory of Trade Cycle Schumpeters Theory of Trade Cycle Keynes Theory of Trade Cycle
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INFLATION
Inflation is a situation where too much money chases too few goods

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THE EFFECTS OF INFLATION

1. Scarcity of Labour,raw material etc.,

2. Rise in the rate of Interest 3. Failure of Consumption to rise due to rising prices.

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DEFLATION/RECESSION

Deflation is an economic theory, which deals with the general reduction in the price levels or in the prices of a type of good or asset.

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THE EFFECTS OF DEFLATION/RECESSION

1. Exorbitant Credit Card Debt 2. Fewer Customers and Lower Income. 3. Putting Your Mortgage in Jeopardy. 4. Cost of Essentials 5. Low Savings

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THE CAUSES AND EFFECTS OF CURRENT RECESSION

The two main reasons that attracted the borrowers were low interests and huge funds that helped easy loans for people. With such attractive promises, people took more and more loans to build houses and invest money.

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THE EFFECTS IT HAD ON INDIA WERE

1) share markets were falling 2) The Indian currency got weakened against dollar 3) Banks faced huge shortage of funds and soon collapsed

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THANK YOU ALL QUESTIONS PLEASE

Friday, October 11, 2013

D.B.Naidu
92480-05303 dbnaidu@hotmail.com

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