During last two centuries countries like USA and Great Britain have seen rapid growth but the economic growth has not followed a steady and smooth upward trend. From the long term perspectives it has seen a great upward trend in GNP (Gross Nation Product (GNP) of a country is the value of all finished goods and services produced by its citizens both domestically and internationally excluding the income earned by foreign residents) but within the upward trend there has been various short run fluctuations in different economic indicators. Period of high income, high employment rate, and higher output has been marked as the period of 'expansion' and period of low income, low output and low employment rate has been marked as the period of 'contraction'. The history of free market capitalist countries has shown that this period of expansion alternates with the period of contraction. These alternating periods of expansion and contraction in economic activity have been called 'Business Cycles' and since they occur periodically they are called cycles. The time period of each business cycle varies from a minimum of 2 years to a maximum of 10 to 12 years. The intensity of the swings of the economic indicators can also differ.
What are Business Cycles?
What are Business Cycles?
What are Business Cycles?
During last two centuries countries like USA and Great Britain have seen rapid growth but the economic growth has not followed a steady and smooth upward trend. From the long term perspectives it has seen a great upward trend in GNP (Gross Nation Product (GNP) of a country is the value of all finished goods and services produced by its citizens both domestically and internationally excluding the income earned by foreign residents) but within the upward trend there has been various short run fluctuations in different economic indicators. Period of high income, high employment rate, and higher output has been marked as the period of 'expansion' and period of low income, low output and low employment rate has been marked as the period of 'contraction'. The history of free market capitalist countries has shown that this period of expansion alternates with the period of contraction. These alternating periods of expansion and contraction in economic activity have been called 'Business Cycles' and since they occur periodically they are called cycles. The time period of each business cycle varies from a minimum of 2 years to a maximum of 10 to 12 years. The intensity of the swings of the economic indicators can also differ.