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7/27/2019 Trade Cycles (Modified)
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TRADE CYCLES-CONCEPTS- EFFECTS-CONTROL
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Trade Cycles arejust the name of
Prosperity and
Adversity;good trade and
bad trade
Hebeler
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Trade Cycles are the
fluxuations in the
aggregate economicactivity.
Any trade cycle starts
from depression, enters
into revival(recovery),
then converts itself into
boom and finally turns
into recession.
W.C.Mitchel
http://images.google.co.in/imgres?imgurl=http://www.andrew.cmu.edu/org/DURINT/mitchel.jpg&imgrefurl=http://www.andrew.cmu.edu/org/DURINT/mitchel.html&usg=__XKTGGO2Y_HePXqp0ngTTT0gRimg=&h=437&w=343&sz=52&hl=en&start=1&itbs=1&tbnid=fbd5jxejFMAGWM:&tbnh=126&tbnw=99&prev=/images%3Fq%3Dw.c.mitchel%26hl%3Den%26sa%3DN%26gbv%3D2%26ndsp%3D20%26tbs%3Disch:17/27/2019 Trade Cycles (Modified)
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PHASES OF A TRADE CYCLE
A typical cycle is generally divided into four phases: -
1. Depression or Downswing (Trough)
2. Revival or Recovery or Lower turning point.
3.Expansion or Prosperity or the Upswing
(Boom)4. Recession or Upper-Turning Point
(Contraction)
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PHASES OF TRADE CYCLE (1)
Depression
Revival
Boom
Recession
Time
EconomicActivity
Y
xO
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PHASES OF TRADE CYCLE (2)
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1.Depression
or Downswing(Trough)
Prices
Consumption
Income
Wages
Employment
Decreased
http://images.google.co.in/imgres?imgurl=http://www.bachbloesemadvies.be/cms/cms/grafisch/tekst/99_208_depression.jpg&imgrefurl=http://www.bachfloweradvice.com/bach-flowers-and-depression-general-depression.htm&usg=__zkDhZCyl1hZ5l01adBTaM37ga30=&h=423&w=284&sz=145&hl=en&start=95&itbs=1&tbnid=KzXGxhVEf8qGfM:&tbnh=126&tbnw=85&prev=/images%3Fq%3DDEPRESSION%26start%3D80%26hl%3Den%26sa%3DN%26gbv%3D2%26ndsp%3D20%26tbs%3Disch:1http://images.google.co.in/imgres?imgurl=http://jc4jc.files.wordpress.com/2007/05/revival.jpg&imgrefurl=http://zoecarnate.wordpress.com/2008/07/&usg=__JJCzeBV0Z59lYkBaQQuUu6o4pyY=&h=300&w=400&sz=29&hl=en&start=22&itbs=1&tbnid=lbxi38FLwYz2pM:&tbnh=93&tbnw=124&prev=/images%3Fq%3DREVIVAL%26start%3D20%26hl%3Den%26sa%3DN%26gbv%3D2%26ndsp%3D20%26tbs%3Disch:17/27/2019 Trade Cycles (Modified)
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2. Revival or
Recovery or
(Lower
turning point)
Prices
Consumption
Income
Wages
Employment
Increased
http://images.google.co.in/imgres?imgurl=http://jc4jc.files.wordpress.com/2007/05/revival.jpg&imgrefurl=http://zoecarnate.wordpress.com/2008/07/&usg=__JJCzeBV0Z59lYkBaQQuUu6o4pyY=&h=300&w=400&sz=29&hl=en&start=22&itbs=1&tbnid=lbxi38FLwYz2pM:&tbnh=93&tbnw=124&prev=/images%3Fq%3DREVIVAL%26start%3D20%26hl%3Den%26sa%3DN%26gbv%3D2%26ndsp%3D20%26tbs%3Disch:1http://images.google.co.in/imgres?imgurl=https://bundaberg.qld.gov.au/arts/images/Seth_boom.jpg&imgrefurl=https://bundaberg.qld.gov.au/arts/boom_baby_boom.php&usg=__Pol2FPF_sewyETE7vqjMWDnGoDk=&h=472&w=591&sz=117&hl=en&start=31&itbs=1&tbnid=-ad7i7qCg6e6CM:&tbnh=108&tbnw=135&prev=/images%3Fq%3DBOOM%26start%3D20%26hl%3Den%26sa%3DN%26gbv%3D2%26ndsp%3D20%26tbs%3Disch:17/27/2019 Trade Cycles (Modified)
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3. Expansion or
Prosperity or the
Upswing (Boom)
Prices
Consumption
Income
Wages
Employment
Increased
http://images.google.co.in/imgres?imgurl=https://bundaberg.qld.gov.au/arts/images/Seth_boom.jpg&imgrefurl=https://bundaberg.qld.gov.au/arts/boom_baby_boom.php&usg=__Pol2FPF_sewyETE7vqjMWDnGoDk=&h=472&w=591&sz=117&hl=en&start=31&itbs=1&tbnid=-ad7i7qCg6e6CM:&tbnh=108&tbnw=135&prev=/images%3Fq%3DBOOM%26start%3D20%26hl%3Den%26sa%3DN%26gbv%3D2%26ndsp%3D20%26tbs%3Disch:1http://images.google.co.in/imgres?imgurl=http://english.pravda.ru/img/idb/recession-2.jpg&imgrefurl=http://english.pravda.ru/world/americas/14-02-2008/104038-economic_recession-0&usg=__XtVX74sv9fssfcD7NhfBZnxa8YU=&h=200&w=200&sz=4&hl=en&start=67&itbs=1&tbnid=Zl-UxCUpyC0enM:&tbnh=104&tbnw=104&prev=/images%3Fq%3DRECESSION%26start%3D60%26hl%3Den%26sa%3DN%26gbv%3D2%26ndsp%3D20%26tbs%3Disch:17/27/2019 Trade Cycles (Modified)
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4. Recession or
Upper-Turning
Point (Contraction)
Prices
Consumption
Income
Wages
Employment
Decreased
http://images.google.co.in/imgres?imgurl=http://english.pravda.ru/img/idb/recession-2.jpg&imgrefurl=http://english.pravda.ru/world/americas/14-02-2008/104038-economic_recession-0&usg=__XtVX74sv9fssfcD7NhfBZnxa8YU=&h=200&w=200&sz=4&hl=en&start=67&itbs=1&tbnid=Zl-UxCUpyC0enM:&tbnh=104&tbnw=104&prev=/images%3Fq%3DRECESSION%26start%3D60%26hl%3Den%26sa%3DN%26gbv%3D2%26ndsp%3D20%26tbs%3Disch:17/27/2019 Trade Cycles (Modified)
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PROPERTIES OF TRADE CYCLE
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Aggregate
Economic Activity
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The Period ofPhases
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The Short
Joseph KitchinCycle of 40 months
http://images.google.co.in/imgres?imgurl=http://upload.wikimedia.org/wikipedia/commons/0/0b/Cl%C3%A9ment_Juglar.gif&imgrefurl=http://www.lyc-eluard-saintjunien.ac-limoges.fr/spip.php%3Farticle110&usg=__Zu81rWQkLzdMb1YvHAfMDcQ2VmY=&h=214&w=160&sz=27&hl=en&start=14&itbs=1&tbnid=4ughlOFnA7ggoM:&tbnh=106&tbnw=79&prev=/images%3Fq%3DJOSEPH%2BKitchin%26hl%3Den%26sa%3DN%26gbv%3D2%26ndsp%3D20%26tbs%3Disch:1http://images.google.co.in/imgres?imgurl=http://www.chewednews.com/Pictures/Clement_Vallandigham.jpg&imgrefurl=http://www.chewednews.com/wbu-archive-2008.html&usg=__qQhvIQzNROOaetl7tOpeQRNdu1M=&h=280&w=180&sz=10&hl=en&start=29&itbs=1&tbnid=f28aasxXNMqcmM:&tbnh=114&tbnw=73&prev=/images%3Fq%3Dclement%2Bjuggler%26start%3D20%26hl%3Den%26sa%3DN%26gbv%3D2%26ndsp%3D20%26tbs%3Disch:17/27/2019 Trade Cycles (Modified)
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The Long
Clement JugglerCycle of 9 years
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The Very Long
Kondratieff Cycle
of 50 years
http://images.google.co.in/imgres?imgurl=http://faculty.washington.edu/~krumme/graphs/ndk.gif&imgrefurl=http://faculty.washington.edu/~krumme/207/development/longwaves.html&usg=__KNfodoqBk-iNMOBs2g_D2fuw7Bw=&h=440&w=288&sz=116&hl=en&start=1&itbs=1&tbnid=lhaxDdhbYaqf6M:&tbnh=127&tbnw=83&prev=/images%3Fq%3Dn.d.kondratieff%26hl%3Den%26sa%3DG%26gbv%3D2%26tbs%3Disch:1http://images.google.co.in/imgres?imgurl=http://www.eilatgordinlevitan.com/pinsk/pinsk_pix/stories/041408_23_b.gif&imgrefurl=http://www.eilatgordinlevitan.com/pinsk/pinsk_pages/pinsk_stories_ss_kuznets.html&usg=__SxBqxtRyyU0kNHoJtDdlVfByVd0=&h=571&w=600&sz=190&hl=en&start=5&itbs=1&tbnid=KrQM1ZtaTxjzIM:&tbnh=128&tbnw=135&prev=/images%3Fq%3Dsimon%2Bkuznets%26hl%3Den%26gbv%3D2%26tbs%3Disch:17/27/2019 Trade Cycles (Modified)
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Simon Kuznets
Cycle of 16-22years or 7-11
years
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The Nature of
Diffusion of Effect
(wages, prices, rents,
profits, consumption,
savings and investment)
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International
in Nature
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HOW CAN TRADE CYCLE BE REDUCED?
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FISCAL POLICY
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MONETARY POLICY
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BUFFER STOCKSCHEMES
http://images.google.co.in/imgres?imgurl=http://www.hispecltd.co.uk/Images/stores_08.jpg&imgrefurl=http://www.hispecltd.co.uk/introduction.htm&usg=__7HERv3ACJh5LX2JGHWauX8Mi6VU=&h=269&w=400&sz=216&hl=en&start=14&itbs=1&tbnid=qqj43A8cKmt2AM:&tbnh=83&tbnw=124&prev=/images%3Fq%3DBUFFER%2BSTOCK%26hl%3Den%26sa%3DN%26gbv%3D2%26ndsp%3D20%26tbs%3Disch:1http://images.google.co.in/imgres?imgurl=http://farm3.static.flickr.com/2612/3807519572_df735d26dd.jpg&imgrefurl=http://peakenergy.blogspot.com/2009_09_01_archive.html&usg=___uCqAa6yDtXIPzxsdn5SOnc9GOo=&h=350&w=500&sz=112&hl=en&start=15&itbs=1&tbnid=uW1517LEtbrGxM:&tbnh=91&tbnw=130&prev=/images%3Fq%3DSTATE%2BCONTROL%2BOF%2BINVESTMENT%26hl%3Den%26sa%3DN%26gbv%3D2%26ndsp%3D20%26tbs%3Disch:17/27/2019 Trade Cycles (Modified)
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STATE CONTROL OFPRIVATE
INVESTMENT
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I.FISCAL MEASURES
During Inflation/Boom
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INCREASE INTAXES
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DECREASE IN
PUBLIC
EXPENDITURE
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INCREASE INPUBLIC DEBT
C td
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During Depression
Decrease in Taxes
Increase in Public Expenditures, and
Decrease in Public Debt
Contd
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II. MONETARY MEASURES
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BANK RATEPOLICY
OPEN MARKET SYSTEM
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OPEN MARKET SYSTEMSale/Purchase of Bonds and Securities in the market
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CHANGES IN
RESERVE
RATIO
Cash Reserve Ratio
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III. BUFFER STOCK
SCHEMES
Official Purchase andsale of food grainsaccording to themarket fluxuations
IV STATE CONTROL OF
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IV. STATE CONTROL OF
PRIVATE INVESTMENT
J.M.KEYNES VIEW MAY BE ADOPTABLE
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WHY DID TRADE CYCLE APPEAR IN THE
ECONOMY?
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THEORIES OF TRADE CYCLES
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SUNSPOTTHEORY
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PSYCHOLOGICALTHEORY
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THEORY OF UNDERCONSUMPTION
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HAWTREY
THEORY OFTRADE CYCLE
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JOSEPH
SCHUMPETERS
THEORY OF
TRADE CYCLE
Friday October 11 2013
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Friday, October 11, 2013
D.B.Naidu92480-05303
dbnaidu@hotmail.com
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