END OF BUSINESS CYCLE Essay Example | Topics and Well Written Essays - 750 words

END OF BUSINESS CYCLE - Essay ExampleMost economist believe that the country was in a recession as the country had posted two quarter of prohibit growth and was not anywhere close to the 2.5% or 3% growth it had achieved in the prior year 2000.The year 2007 differenceed with a 0.6% GDP as compared to 4.9% in the 3rd quarter. 2008 started with the 0.9% at the end of the 1st quarter. The last two quarter show no negative growth so technically the economy is not in a recession.The above table shows a slight increase in the GDP rate for the 1st quarter of 2008 as compared to the fourth in 2007. The marginal uptrend is the result of organization expenditure exports and the positive trend in personal consumption expenditure .The last two quarters are a classic example when the economy is underutilizing its labor and capital. The economy is slowly shrinking forward from its potential and this can lead to a recession. The Personal consumption expenditure though not negative has clear ly failed to grow in the 1st quarter leading to inventory accumulation. This will force line of businesses to overturn back on production in an effort to reduce inventories. Unemployment rises as workers are laid impinge on and incomes reduce. This further b go down consumption spending, investment spending on machinery, and plant. Businesses adopt a pessimistic onward motion worried about future sales and demand.3The above figures can be achieved only if more presidential term income is available to the common person, which will in turn increase spending, and demand for goods and services. The forecast also rings bells of the steep rise required in the GDP during the forthcoming quarters of the year.2. Pick two factors cited in the Economist article that you think will have the most impact on future business cycles Explain why they are important and whether you think they will contribute to more severe or less severe business cycles?We can divide the above-mentioned factors in to two major categories Management factors