Economic cycle, its essence, and phases
Economic Cycle: History has shown that the market system ensures the efficient development of the economy based on freedom of choice. But the market economy also has serious imperfections, the most important of which is its cyclical nature.
The market economy is constantly evolving, but this development occurs in waves, cyclically.
Cyclicity is a general form of movement of national and world economies. It represents the movement from one stable state of the economy to another. This is one of the ways of self-regulation of the market economy, including changes in its sectoral structure.
Cycles are periodic fluctuations in economic activity
A cycle is a period between two identical states of the economy, which is a successive change in the rise in economic activity by a fall in the level of basic macroeconomic variables.
The cycle includes a series of successive phases
K. Marx identified four phases: crisis; depression; revival; and climb.
The initial phase of the cycle is the crisis decline in production. At this point, there is a sharp drop in the level and rate of economic growth, and then, as a rule, a direct reduction in the scale of production. These phenomena are associated with the overproduction of goods.
The crisis manifests itself:
– in the overproduction of goods in comparison with the effective demand for them: as a result, the mass of already produced goods does not find an appropriate market;
- In a sharp drop in prices;
- In the reduction of production volumes;
- In reducing employment and all social parameters;
- Many entrepreneurs are unable to pay their debt obligations and fail.
Life on credit
The US is the biggest debtor in the world. The USA is the richest country. The secret of success is that the States know how to live in debt. No one in the world handles money better than Americans. The United States is a model of how to live in debt.
Other countries also have debts, for example, African ones. But using Africa as an example is like messing up my shoelaces.
Some live like cats in oil, and use loans, while others barely make ends meet and take one loan to get another. What is the reason for such social injustice?
I think there is no injustice. Everything is very fair. You need to learn to live in debt and not be shy to fight for your material well-being.
Plan for your well-being
- Set your personal financial goals for the next five years. What do you want to have?
- Determine how much money you have to earn and what prospects you have at your job or in your line of business.
- When it will be clear to you what needs to be done for your financial well-being, today, tomorrow, and the day after tomorrow. – 30% success.
- When you start putting it into practice, what becomes clear to you is another 69% success.
- One percent is good luck. And for those who know what to do – good luck will come.
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You can take out a loan if:
- After monthly payments for servicing the loan, each family member must have at least 15 thousand rubles left (as of February 2010). If there is no family, then at least 20 thousand rubles should remain.
- If you are aiming for your income to grow.
- If you use credit money to purchase durable goods, real estate, or to repair objects that are important to you.
- If you buy with credit money, then you can resell with a markup of at least 30%.
- If money is needed for your well-being (a loan for treatment, cosmetology)
- If you decide to get an education or educate your children with credit money.
Live in debt happily and wisely.