4 Business Cycle Phases, Depression, Revival, Prosperity, Recession

Thu, 07/26/2012 - 02:46 -- Umar Farooq

Phases of Business Cycle

All the four business cycle phases are cyclical but there is no explicit period or intervals for these business cycle occurrences. Below are the four business cycle phases or trade cycle phase.

  1. Depression Phase
  2. Revival Phase
  3. Propensity Phase
  4. Recession Phase

1. Depression Phase

Under the depression phase both economic activities and national income fall and the cost is comparatively higher than price. Level of profit decreases and there is a reduction in the consumer and capital goods. Graph of bank credits goes downward. In simple word during depression the level income, employment, consumption, prices comes to the lowest level.

2. Recovery & Revival Phase

During depression phase economy slowly moves towards recovery. Slowly and steadily the levels of income, employment, consumption and prices goes upward in revival phase of trade cycle. Those consumers delayed their consumption in the hope of decrease in prices, now come back to consumption. As the consumption starts in the economy businesses becomes profitable. There is noticeable re-employment in the economy.

four phases of business cycle

3. Boom & Prosperity Phase                           

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