Measure to Control Trade Cycle / Measure for Economic Stabilization
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Measure to Control Trade Cycle / Measure for Economic Stabilization

Measure to control trade cycle / measure for economic stabilization Lack of unanimity as to the policy to be followed in a crisis is even more marked than the lack of unanimity about the causes thereof. For a complicated malady no simple remedy can be prescribed. Most of the economists are agreed that under the existing economic order crises are unavoidable; you can only delay them or mitigate their severity when they come. We need, therefore, two sets of measures: the preventive and the curative.

Measure to control trade cycle / measure for economic stabilization

Lack of unanimity as to the policy to be followed in a crisis is even more marked than the lack of unanimity about the causes thereof. For a complicated malady no simple remedy can be prescribed. Most of the economists are agreed that under the existing economic order crises are unavoidable; you can only delay them or mitigate their severity when they come. We need, therefore, two sets of measures: the preventive and the curative.

For preventing or avoiding crises, the remedy will depend on the diagnosis. Influences of climatic factors on the supply of raw materials cannot be ruled out altogether. In a country like India, where nearly two-thirds of the people depend on agriculture, it is necessary that dependence on rains should be removed as far as possible so that agriculture no longer remains a gamble in the monsoons. A network of canals, wells and reservoirs may be provided to ensure an adequate and regular supply of water. Other external factors like wars, earthquakes, and epidemics cannot be provided against. They do not, however, play an important part in a trade cycle. At any rate, they do not occur with any degree of regularity.

Imperfect adjustment of demand and supply can be rectified by collecting and disseminating correct and up-to-date statistical information about the condition of crops, quantities of goods produced by the main industries, state of employment, imports and exports, per capita income, price and cost of living index numbers and of company floatation, profits, etc. This will help the businessman to form an intelligent forecast of the probable changes in the demand for, and supply of, certain types of goods. The intelligence bureau may issue directives and warnings from time to time so that undue pessimism or optimism is nipped in the bud. In the boom period, the companies may be asked to follow a cautious policy in the distribution of dividends and to build up reserves.

Some of the policies outlined for controlling trade cycle or measures for economic stabilization include monetary policy, Fiscal policy, and State control of investment. Besides these policies used at national levels, international measures also come in play while controlling trade cycle or for economic stabilization.

 

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