1.

Boom and recession are cyclic. Give reason.

Answer»
  • Boom is attained when economic activity reaches the maximum growth level in a given time period.
  • In the Boom period, the demands of goods/services are at its peak and so do incomes and profits.
  • Just like after tides the ebb must come, after boom recession must come. The period that comes after the ‘boom’ is called ‘recession’.
  • During the boom period, when economic activity reaches to its peak which in turn takes the investments and employment also to the peak i.e. the highest possible levels, a slowdown occurs.
  • As a result, demand slows down and so do investment and employment and recession occur.
  • Thus, boom and recession are cyclic.


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