Understanding Business Cycles, Effective Demand, and Income Flow
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Features of Business Cycles
Though different business cycles vary in duration and intensity, they share common features, which are explained below:
- Wave-like movement: A business cycle is a wave-like movement in macroeconomic activity, such as income, output, and employment, showing upward and downward trends in the economy.
- Recurrent nature: Business cycles are recurrent and occur periodically, though they do not follow a strict regularity.
- Distinct phases: They consist of distinct phases: prosperity, recession, depression, and recovery.
- Variable duration: The duration of business cycles may vary from a minimum of two years to a maximum of ten to twelve years.
- Synchronic character: Business cycles are synchronic; they are all-embracing rather than