What are the phases of the business cycle?

The four phases of the trading cycle are prosperity, recession, depression and recovery. Businesses usually go through one of these four stages of the trading cycle since the business begins throughout life and until it sells or closes. Depending on the business, the cycle may start again, or some businesses can get stuck in the specific stages of the cycle.

During the prosperity of the business cycle, the company is the highest production and the highest income. During this phase, there is a high demand for the product produced by the company and publishing the business as many products as it can meet and can even exceed customer demand. Because in the first of the four phases of the trading cycle there is such a high demand for products where the economy or business is at this stage, employment and income levels are also high.

As the prosperity phase ends, another phase of the trading cycle is the phase of the recession. At this point of the municipalityThe cycle is no longer so high. In fact, the demand for the product decreases. As demand is reduced, the product production is reduced. Reduction of production also requires fewer employees, so this phase also records a reduction in employment or increases unemployment rate, reduction of profits and income.

When the recession phase continues for a longer period of time, the third phase of the trading cycle. This is the phase of depression. During this phase there is an increasingly constant decline in product demand, demand for workers and insufficient use of people and material resources available for product production.

The final of the four phases of the trading cycle is the recovery phase. This phase of Begins, when the company hits a trough in business and begins to see the tendency in the demand for product demand begins to increase and usually increases over time. Increased demand then requires an increase in materials, people and other sources to increase demand. In the endIn the recovery phase, the enterprise returns from the loss of money to re -profit.