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Finance: What is a Business Cycle? 3 Views
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Description:
What is a Business Cycle? A business cycle refers to the ups and downs in GDP or output over a period of time. Business cycles show times when the market is booming and GDP is high as well as times of recession (cycles).
- Social Studies / Finance
- Finance / Financial Responsibility
- College and Career / Personal Finance
- Life Skills / Personal Finance
- Finance / Finance Definitions
- Life Skills / Finance Definitions
- Finance / Personal Finance
- Courses / Finance Concepts
- Subjects / Finance and Economics
- Finance and Economics / Terms and Concepts
- Terms and Concepts / Investing
- Terms and Concepts / Real Estate
Transcript
- 00:00
Finance allah shmoop What is a business cycle Well here's
- 00:06
a guy giving his cycle the business Yeah the bike
- 00:10
moves forward in time but this little white mark on
- 00:12
the tire while it keeps returning to the same place
- 00:15
again and again and again So yeah that's the foundation
Full Transcript
- 00:18
of the notion of business as a cycle time continues
- 00:22
but you know business gets hot then cold then hot
- 00:25
then cold and yeah you get the idea Well why
- 00:27
is this the case Well lots factors They mostly revolve
- 00:30
around the wild pagan dance of greed and fear And
- 00:35
they get exacerbated when governments actively monkey around with the
- 00:38
cost of renting money otherwise known as the raising and
- 00:42
lowering of interest rates And if you're new to this
- 00:45
whole space if you lower interest rates and make money
- 00:48
cheap to borrow you heat up the economy or at
- 00:50
least you encourage it to get hot And if you
- 00:52
raise the cost of borrowing money well then you're going
- 00:55
to try to cool it off And the reason he
- 00:57
might want to do that is if inflation is roaring
- 00:59
right All right well in the us the business cycle
- 01:02
Runs roughly every eight years for what is called the
- 01:05
short cycle of business cycles for reasons only partly known
- 01:08
to humankind the money cycle revolves around the presidential election
- 01:13
cycle when historically every couple of terms the population gets
- 01:17
sick of one process of messing up government and they
- 01:20
choose to elect a new way to mess up government
- 01:23
So that's The short cycle happens every seven or eight
- 01:25
years and you see it in the stock market with
- 01:27
generally meaningful corrections Along that pattern there's also ate a
- 01:31
long business cycle that sees major shift about every quarter
- 01:35
century World wars affected numbers Technology innovation affects the numbers
- 01:40
and other exogenous factors like pollution and labor replacement by
- 01:44
robots Yeah yeah it's coming and healthcare or disease changes
- 01:48
and or big innovations that completely repaint the pavement such
- 01:52
that the tire slipped and turn and twist trying to
- 01:55
keep the bicycle upright The key goal Look outfor bollards
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