What Are The Causes For Trade Cycle?

Question

What Are The Causes For Trade Cycle?

5 Answers

Answer Question

Answer 1

Fluctuations in trade cycles can be caused by one or many of the following factors :-

1) Low employment levels or in other words High Unemployment rates may cause fluctuations in trade cycles.
2) The cycle may also be affected by employment levels above high or full employment levels which disturbs the equilibrium in a market.
3) The ratios between aggregate demands and aggregate supply.
4) Wages increase in periods of high employment levels and tend to fall in low unemployment scenarios which also affect the trade cycles and which in turn affects the demand/supply ratios.
5) The disparity between input and output levels.
6) Budget deficits.
7) Periods of inflation or periods of recession caused by the disparities in demand and supply.

Answer 2

Meddy WizKhallifa answered

Trade cycle have got the following features
#1 its phases are cummulative
#2 it have a wave like appearance
#3 it cover a period of time
#4 its global in nature

Answer 3

The trade cycle is a term used to describe the various fluctuations that occur in the economy. These fluctuations and their characteristics are:

Boom: In this phase, there is fast growth in economy and demands and outputs are high. There are investments and low unemployment
Decline: The output becomes low and the demand also decreases.
Recession: The economic growth is low and there is low output. Investors lose their confidence and unemployment increases.
Recovery: In this phase, the economy starts growing eventually and the demands gradually reach high levels and the investor confidence also gets restored.

Answer 4

G'day Guest,

Thank you for your question.

Trade cycles are fluctuations in national income over an indefinite period. Booms are caused by optimistic expectations. Recessions are caused by more pessimistic expectations leading to a decline in investment.

Regards

Answer 5

Business cycle is an American term for which the British economist coined termed Trade Cycle. During the last 150 years the world has shown tremendous economic development and growth but it will be wrong to understand that this progress has been steady and sustained and had no bottle necks.

Every business is subject to ups and downs. The period of prosperity is converted into failure. After every period of boon the period burst comes which also is replaced by the boom. The same oscillation in the business are called trade or business cycle. A trade cycle could be defined as, 'Trade cycle refers to the total period of business which passes though prosperity and failures'.

During the depression period of trade cycles prices and wages coupled with the decrease in production, increase in unemployment while during the period of boom prices and wages coupled with increase in production, unemployment decreased and the level of employment increased.

Trade cycle is the different phases of rapid increase of the national income. National income increases fast during the boom period but it slows down gradually and decreases at last. Decrease in the national income is termed as Economic Recession. After economic recession boom is repeated once gain and when this boom reaches its peak the trade cycle becomes the recession again.