Question

explain the all theories of trade or business cycle in economics

Answer 1

1. Over-investment theory:

According to this theory trade cycle occurs because of the over investment in investment industries.

2. Under consumption theory:

The chief exponent of this theory is I.S. Hobson. According to him, trade cycles appear due to mal-distribution of national income.

3. Keynes’ saving and investment theory:

In this ‘General’ Theory Keynes has given an explanation of business or trade cycle. Keynes never attempted an elaborate theory of business cycle as such.

4. Hicks’ theory of trade cycle:

Prof Hicks explains the phenomenon of trade cycles by combining the principle of multiplier and acceleration. According to Hicks, investment is of two types. (i) Autonomous investment and (ii) Induced investment.

Answer 2

A trade cycle refers to fluctuations in economic activities specially in employment, output and income, prices, profits etc. It has been defined differently by different economists. According to Mitchell, “Business cycles are of fluctuations in the economic activities of organized communitie
The noun ‘cycle’ bars out fluctuations which do not occur with a measure of regularity” hope will help you