What is Trade Cycle Sample Essay
A business cycle or trade cycle refers to market or economic fluctuations that are usually a result of different changes in certain economic variables like output, prices, inflation, and unemployment. According to the trade cycles observed in the Excel sheet, we can conclude that Australia has reached maturity and it is unlikely to grow any much more unless there are various fundamental changes in the economic composition of the country. On the other hand, we can say that the Chinese economy is still in its growth phase and it is currently in a boom period.
This is evidenced by the graph patterns. The fluctuations in the trade cycles are common phenomena since an economy cannot always stay in a boom or recession.
Depending on the monetary and fiscal policies that a country or economy adopts play a very important role in determining how soon the economy will recover from a recession or how long it can maintain a boom session.
The Chinese economy has been able to maintain a long growth period mainly as a result of maintaining a semi-floating currency thus helping Chinese exporters to mitigate against losses that may arise as a result of fluctuations in its currency’s exchange rate.