Indian Economy Questions

Business cycles are identified as having four distinct phases:

1. Expansion,

2. Peak,

3. Contraction, and

4. Trough.

Expansion is the phase of the business cycle when the economy moves from a trough to a peak. It is a period when the level of business activity surges and gross domestic product (GDP) expands until it reaches a peak. A period of expansion is also known as an economic recovery.

An expansion is characterized by increasing employment, economic growth, and upward pressure on prices.

The prime cost calculates the use of raw materials and direct labor, but does not factor in indirect expenses, such as advertising and administrative costs.

Supervisor's wages doesn;t come under prime cost.

Fixed expenses are those expenses that do not change when there is a change in production or sales level.

Examples of Fixed Expenses are rent, insurance, payment on loans, salaries, advertising, etc...