causes and cures for business cycles

Business Business cyclescycles

Cindy&Jing

What is business cyclesWhat is business cycles？• The term business cycle (or e

conomic cycle) refers to a phenomenon that a cyclical economic expansion and economic contraction cycle in the economy.

What is business cyclesWhat is business cycles？• These fluctuations are often measured usi

ng the growth rate of real Gross Domestic Product (GDP) .

• The business cycles consistent four stages.

Four stages

• Stage One – Start-up/Creation

• Stage Two – Growth

• Stage Three – Maturity

• Four – Recession/Decline

Four stages

Causes of business cycles

• External Causes

• Internal Causes

A. sunspot theory

It is said that the changes of cyclical naturally sunspots will affect the cycle of climate change, which would affect the agricultural harvest, and harvest the abundance of agriculture will impact the whole economy.

B. the political cycle theory

• Political cycle theory thought the business cycles caused by the government to the cyclical nature of the decision-making (mainly in order to solve the cycle of inflation and unemployment).

Causes of business cycles

• External Causes

• Internal Causes

A. a purely monetary theory

• Pure monetary theory that the money supply and monetary flow directly determines the fluctuations of the name of national income,

B. over-investment theory

• Theory of over-investment thought the business cycles caused by excessive investment.

C. under-consumption theory

• The under-consumption theory thought economic recession caused by the demand for consumer goods can not keep up with community growth of consumer goods production.

D. Psychological theory

• The theory thought that the business cycles depend on the investment, and investment size depends mainly on the owners` expectations for the future.

Cu

Cures for the business cycles

Liquidate labor, liquidate stocks,

liquidate the farmers,

liquidate real estate

Andrew William Mellon (March 24, 1855 – August 27, 1937)

World War II

America became officially involved in World War II. Did World War II

really end the Great

Depression, though?

government intervention

Conclusion

•External causes•Internal causes

References

• Cures for the Great Depression.The Great Depression Online. From http://www.greatdepressiononline.com/cures-for-the-great-depression.htm

• Causes and Cures. America’s Great Dpression. Statistics Retrieved on December 28, 2007 from http://www.amatecon.com/gd/gdcandc.html

• http://en.wikipedia.org/wiki/Business_cycle• http://www.buzzle.com/articles/four-stages-of-business-

cycle.html