ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -As companies lay off workers, consumers lose their jobs and stop buying anything but necessities. That causes a downward spiral and recession. The bust phase stops when supply lowers prices enough to stimulate demand. It occurs when prices are so low that those investors who still have cash start buying again.

Detailed explanation-2: -A boom ends when GDP turns negative. That’s the contraction phase of the business cycle. It signals the start of a recession.

Detailed explanation-3: -A bust is a period of time during which economic growth decreases rapidly. In the stock market, busts usually are associated with bear markets. During busts, inflation decreases, and in extreme cases, can give way to deflation. In addition, unemployment rises, income falls, and aggregate demand decreases.

Detailed explanation-4: -Just as fluctuations in demand, fluctuations in investment is one of the main causes of business cycles. The investments will fluctuate on the basis of a lot of factors such as the rate of interest in the economy, entrepreneurial interest, profit expectation, etc.