trade cycles (gr i)
TRANSCRIPT
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WELCOME
TRADE CYCLES-CONCEPTS- EFFECTS-CONTROL-INFLATION,DEFLATION
BY
D.B.NAIDU
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DEFINITION
Trade Cycles are just the name of
Prosperity and Adversity; good tradeand bad trade
Hebeler
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Contd..
Trade Cycle are the fluxuations in the aggregateeconomic activity. Any trade cycle starts from
depression,enters into revival, then converts itself
into boom and finally turns into recession.
W.C.Mitchel
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PHASES OF A TRADE CYCLE
A typical cycle is generally divided into four phases: -
1. Expansion or Prosperity or the Upswing
(Boom)2. Recession or Upper-Turning Point
(Contraction)
3.Depression or Downswing (Trough)
4. Revival or Recovery or Lower turning point.
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PHASES OF TRADE CYCLE
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PHASES OF TRADE CYCLE
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ECONOMIC ACTIVITY IN THE US
19542005
Deviations from the long term growth trend US 1954 2005
http://en.wikipedia.org/wiki/File:Businesscycle_figure3.jpg -
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TYPES OF CYCLES
1. The Short Kitchin Cycle
2.The Long Jugler Cycle
3.The Very Long Kondratieff Cycle
4. Kuznets Cycle
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PROPERTIES OF TRADE CYCLE
I. Aggregate Economic Activity.
II. The Period of Phases. III. The Nature of Diffusion of Effects.
IV. International in Nature.
V. Social Effect.
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HOW CAN TRADE CYCLE BE REDUCED?
I. Fiscal Policy
II.Monetary Policy
III.Buffer Stock Schemes
IV.State Control of Private Investment
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I.FISCAL MEASURES
Increase in Taxes
Decrease in Public Expenditures, and
Increase in Public Debt
During Inflation/Boom:
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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
Bank Rate Policy
Open Market System
Changes in Reserve Ratio
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III.BUFFER STOCK SCHEMES
Official Purchase and sale of food grains
according to the market fluxuations
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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
Sunspot Theory
Psychological Theory
Theory of Under Consumption
Hawtrey Theory of Trade Cycle
Schumpeters Theory of Trade Cycle Keynes Theory of Trade Cycle
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INFLATION
Inflation is a situation where too much
money chases too few goods
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THE EFFECTS OF INFLATION
1. Scarcity of Labour,raw material etc.,2. Rise in the rate of Interest
3. Failure of Consumption to rise due to rising prices.
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DEFLATION/RECESSION
Deflation is an economic theory, which dealswith the general reduction in the price levels or in
the prices of a type of good or asset.
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THE EFFECTS OF
DEFLATION/RECESSION
1. Exorbitant Credit Card Debt
2. Fewer Customersand Lower Income.3. Putting Your Mortgage in Jeopardy.
4. Cost of Essentials
5. Low Savings
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THE CAUSES AND EFFECTS
OF CURRENT RECESSION
The two main reasons that attracted the
borrowers were low interests and huge fundsthat helped easy loans for people. With such
attractive promises, people took more and
more loans to build houses and invest
money.
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THE EFFECTS IT HAD ON INDIA WERE
1) share markets were falling
2) The Indian currency got weakened against dollar
3) Banks faced huge shortage of funds and soon
collapsed
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THANK YOU ALL
QUESTIONS PLEASEFriday, October 11, 2013
D.B.Naidu92480-05303
mailto:[email protected]:[email protected]