The Business Cycles as a Form of Economic Development

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Ministry of Education and Science of Ukraine National Technical University of Ukraine “Kiev Polytechnic Institute” Faculty of Management and Marketing Report on Macroeconomics «The Business Cycles as a Form of Economic Development» Written by The student of UZ-92 Osipov Dmitry Checked by Ereshko Yu. A. Kiev-2010 Contents busines economic cycle Introduction Definition of Cyclicity Stages of the Business Cycles Recession Through Recovery Peak Causes of Economic Cycles Types and Continuity of the Business Cycles Short Cycles Middle Term Cycles Long Cycles (The Kondratiev wave) Stabilizing policy of the State The Great Depression The List of Used Literature Introduction The modern society strives to continuously improve the level of life and living conditions, which can

only provide sustainable economic growth. However, long-term economic growth is not even, but is constantly being interrupted by periods of the economic instability. The ups and downs along the level of output, following one another, are commonly called the business or economic cycles. We can meet cycles, including economic ones, almost everywhere. Our life, the career develops cyclically - we always feel expansions, recessions. The topic is relevant because we all have to understand that once we hit the pick, it’s going to be followed by the recession. Definition of Cyclicity The economy has the ability to develop cyclically: it has its own crises, recoveries, "booms". People always strive to reach the peak, the "boom" of their welfare; the government - to

the peak of economic development of the state. But the economy can’t stay at the peak of its development forever, it’s always followed by the recession, crisis. Under these two words we all understand something bad, something we want quickly to get rid of. Crises have a negative impact on almost everything, so we try to avoid it. But even in the developed countries like USA, UK, France, Germany and other countries of Western Europe we don’t see the successful experience of avoiding them. Scientists have not determined the exact causes of the cycles for several centuries. Currently, there are only theories of economic cycles. The other economists agree with them or offer brand new ideas on the problem .However, this question remains open to this day. Economic cycle (or the

business cycle) – is the periodic but irregular up-and-down movements in economic activity, measured by fluctuations in real GDP and other macroeconomic variables. The main characteristics of business cycles: Self renewal; Continuity; Wave-looking dynamics of macroeconomics factors. The economic cycles depend on output. The output is expressed by the quantity of commodities and services, produced by the economy of the exact country. Stages of the Business Cycles The full business cycles have four stages it’s gone through. They are: recession, through, recovery and peak (or “boom”). Recession At the moment of recession there is a decline in economic growth, and then, as a rule, direct reduction in output. These phenomena are associated with the overproduction of goods. At

this time, the amount of unsold goods dramatically increases. We can see massive bankruptcy (ruin), industrial and commercial enterprises which can not sell goods that are accumulated. Because of the suspension of production, the unemployment is rapidly growing, wages are declining. The stock market is crushed, we observe falling stock prices. All entrepreneurs are in dire need of money to pay debts quickly formed and therefore the norm of banks-sky percentage will increase significantly. Here are the longest recessions of the last century: 1929-33: 43 months 1910-12: 24 months 1913-14: 23 months 1920-21: 18 months 1973-75: 16 months 1980-81: 16 months As we can see the longest recession happened during the Great Depression (1929-33). It lasted 43 months. Trough Following the