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Business Cycle is also known as Economic Cycle.
A business Cycle is not a regular, predictable, or repetitive phenomenon like the swing of the pendulum of a clock. Its timing is random and, to a large degree, unpredictable.
Phases of Business Cycle:
Boom:
- During the Boom phase production capacity is fully utilized and also products fetch an above normal price which gives higher profit.
- The Demand is more or less stagnant or it even decreases.
Recession:
- A downward tendency in demand is observed. The supply exceeds demand
- Desire for liquidity increases all around.
- Producers are compelled to reduce price so that they can find money to meet their obligations.
- This Phase of the business cycle is known as the Crisis.
Depression:
- Underemployment of both men and materials is a characteristic of this phase. General Demand falls faster than production
- Volume of Production will be reduced.
- The demand for the bank credit is at its lowest which results in idle funds.
- The interest rates are decline regime.
Recovery:
- Depression phase done not continue indefinitely.
- Wages will be paid low.
- Prices are at the lowest, the consumers, who postponed their consumption expecting a still further fall in price, now start consuming.
- As demand increases, the stocks of goods become insufficient.
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Various sectors of Indian economy:
i. Agriculture ii. Industry
iii. Micro and Small Enterprises (MSEs) iv. Services
Agriculture Sector is one of the most important sectors of Indian economy.
Agriculture Sector accounted for 17% of GDP in 2008-09.
The MSMED Act, 2006 classifies enterprises broadly into two categories
i. Manufacturing enterprises ii) Service Enterprises.
Service Sector is also called as Tertiary Sector.
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