In this article we will discuss about the pure monetary theory of business cycle. Also learn about its criticisms. The business cycle literature abounds in monetary or financial theories. (Most of such theories lie in the mere general category of expectations theories since they rely on endogenous changes in expectations to provide cycle turning points.) A pioneering attempt to develop [...]
In this article we will discuss about the innovation theory of business cycles. Also learn about its criticisms. Joseph Schumpeter offered his own explanation of trade cycles on the basis of the timing of major innovations in a capitalist system. He has suggested an explanation of the business cycle in items of innovations that take place in the economic system [...]
Show that the simultaneous operation of the multiplier and accelerator can cause income Auctions. Business conditions never remain unchanged. Prosperity may be followed by depression or a crash. Economic expansion yields place to recession, with consequent fall in national output or GNP, employment, and real incomes. Prices and profits may fall. People are thrown out of jobs and idle capacity [...]