List Down The Various Measure To Control The Trade Cycle?


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Rosie Normanton answered
There are myriad ways to control the trade cycle; however, it must be said that the trade cycle also has a life of its own, and it may not respond to typical changes designed to "help it along". For example, government stimulus packages that are handed out to large banks may keep banks afloat, but they may not necessarily help the common people (who are actually the bank's customers).

  • Band aid solutions

Therefore, band-aid solutions that offer temporary fixes may not be enough to create jobs, hold back recessions, or spur spending in tough economic times. Other typical measures used to control the trade cycle include taxation laws (import/export, laws small and large business laws, etc.).

Every country has their own tax laws, and these may be used to make doing business in a country more appealing. In other words, if the government makes it cheap for corporations to set up factories and so on, corporations will be more inclined to set up shop, and this will create jobs. However, giving too many breaks to big business is a problem, too, as it makes the middle and lower classes quite angry.

  • Tax laws can spur investment

In a perfect world, taxation would be based on income and assets; however, in the real world of sustaining the trade cycle at all costs, the very rich often catch a break. The middle class tend to bear the brunt of the tax burden, since they don't have access to the tax loopholes of the very rich, and they don't access social services as much as the poorest citizens. There will always be a link between taxation laws and the trade cycle.

The trade cycle can be severely injured and disrupted by stock market crashes, so economists try to predict these downward spirals far in advance. In fact, there is usually warning that these crises are looming, even if analysts can't say exactly when they take place.

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