Timely identification of economic contraction and its severity allows policymakers to intervene, and thereby reduce its amplitude and duration.
In addition, firms can re-evaluate projections of sales and profits, and the consumers their purchasing and investment plans, based on information on transitions to new business cycle phases.
Company Decline and Demise occur faster during economic recession and depression. It makes practical sense for accountants to view companies as ongoing entities that will continue in business indefinitely.It is the national source for measuring the stages of the business cycle. economic output as measured by Gross Domestic Product.The NBER measures five factors to define when a recession is occurring. That's everything produced businesses and individuals in the United States.Most of the research in business cycles is done keeping in mind advanced industrial economies.The scarcity of research for studies of business cycles in India along with data limitations might be some of the reasons why policymakers in India are not too concerned about this issue. Business cycles are the short-run fluctuations in aggregate economic activity around its long-run growth path.Its banks were left in a mess (Blundell-Wignall and Slovik 2010), Greece faced a still haunting debt crisis and rumours of Eurozone break-up were taken seriously (Blejer and Levy-Yeyati 2010).The policy response to these various challenges required, and still requires, a proper identification of the business cycle.It analyses and compares the behaviour of key macroeconomic variables such as consumption, investment, unemployment, money supply, inflation, stock prices, etc., which may have different dynamics before, during and after the recession.It identifies turning points which act as a reference point for the construction of coincident, leading and lagging indicators of the economy.April 2009 marked a clear trough in industrial production, following the peak in January 2008.The Eurozone has been it hard and in many ways by the Global crisis.Definition: A recession is "a period of falling economic activity spread across the economy, lasting more than a few months." That's the official definition from the National Bureau of Economic Research (NBER).The NBER is the private non-profit that announces when recessions start and stop.These are the indicators to watch if you want to know when the economy is in a recession. It's called real because the effects of inflation are stripped out.