Effects of Business Cycles
During bad economic times like recession and depression, various sectors and individuals are affected in different ways. For instance, those who produce capital goods like trucks, buildings, farm machines, and so forth are greatly affected in terms of production and employment. Firms have no reason to buy capital goods when economic or business activities are down. Their capital goods are not operating at full capacity. In case, such facilities need replacement, firms just repair them. As a result, expenditure on new capital goods greatly declines. Hence, the various industries which manufacture such capital goods suffer from very low or negative sales. Many of their employees have to be laid off due a tremedous fall in production.
In the same manner, industries which produce consumer durables like cars, refrigerators, gas ranges and other home applicances are adversely affected during bad economic times. Consumers tend to be economical. They are forced to be just satisfied with their existing cars and appliances. They just repair them instead of purchasing new ones. Obviously, such consumer attitude has negative effects on car producers and appliance manufacturers. Both production and employment fall.
More by this Author
Bases of Credit The word "credit" has been derived from a Latin word creditum. It means trust. Credit refers to the ability to acquire something of value like goods, services, money, or securities at the...
The entrepreneur, as a manager, controls the human and non-human resources in such a way that goals are attained. Many concepts, skills and approaches have been scrutinized relating to management. These...
Biology is the study of living organisms and there are many subfields of study under that umbrella. From anatomy to zoology, there are more than 30 different areas of study under biology.
No comments yet.