INTRODUCTION

SECTION-B

BUSINESS CYCLE

The discussion on growth and development has shown their internal interdependence. If the quality of life in an economy is to be enhanced, there is a need of conscious public policy which can spend and invest in areas like food, nutrition, health, education, shelter, social security, etc. But for such expenditures and investments, the economy needs equitable level of income, too. The income enhancement in any economy takes place via increasing the level of production in the economy, i.e., real gross national product (GNP). It means, development requires higher growth, i.e., higher levels of economic activities. With the help of suitable kind of economic policies, the government of an economy keeps trying to maintain a higher level of economic activity. But, at times, economy keeps failing in this objective. And, thus economies fluctuate between the best and the worst levels of economic activities which is known in economics as boom and depression, respectively. They can be called different phases of the economic activities of the economies. In between boom and depression, there might be many other situations of the economic activities, such as—stagnation, slowdown, recession and recovery. The fluctuations in the level of economic activity between the depressions and booms has been called by the economists as business cycle or trade cycle with recession and recovery as the main intermediate stages.74 Stagnation75 and slowdown may be considered as other intermediate stages of the business cycle. We intend here to understand the actual meanings of each of the stages. Economists have pointed out that the business cycle is characterised by four phases or stages in which economies alternate:‌

(i) Depression

(ii) Recovery

(iii) Boom

(iv) Recession