LAND UTILIZATION Land is a scarce resource, whose supply is fixed for all practical purposes. At the same time, the demand for land for various competing purposes is continuously increasing with the increase in human population and economic growth.Land use pattern at any given time is determined by several factors including size of human and livestock population, the demand pattern, the technology in use, the cultural traditions, the location and capability of land, institutional factors like ownership pattern and rights scale regulation. Major Types of Land Utilization in India : As in all other countries, land in India is put to various uses. The utilization of land depends upon physical factors like topography, soil and climate as well as upon human factors such as the density of population, duration of occupation of the area,land tenure and technical levels of the people.There are spatial and temporal difference in land utilization due to the continued interplay of phys...
CAUSES OF BUSINESS CYCLE
The role of following factors external and internal which cause business cycles : Internal factors
Internal factors refer to those causes working from within economic system itself which give rise to self generating and recurring business cycles. These are
a)Monetary factors : According to Hawtrey's the role of the monetary factors in generating upswings and downswings in economic activity.
-Determining level of economic activity in response to changes in discount rate.
-Changes in flow of total monetary demand.
-Role of external drain and recall of bank reserves. The three factors when combined under different conditions can together cause upswing and down turn in economic activity. The direct policy implications is that anti deflationary policy must aim to stabilise,not price level of commodities, but prices of factors of production.
b) over saving : Over saving implies under consumption which results from the unequal distribution of wealth and income in society. Lager savings if invested result in excessive capital formation and hence excessive supply of consumer goods. Since the expansion of capital goods sector is faster than that of consumption goods sector,business cycle get perpetuated in capitalist economy
c) Over investment : over investment takes place when there is too much expansion of money and is sole cause of business cycles. The unplanned changes in structure of production of economy brought by divergence between money rate and natural rate pf interest ate considered main cause of trade cycles in economic system.
Natural rate of interest is that at which demand for loanable funds equals the supply pf loanable funds.Money rate of interest is that which actually prevails in the market at particular time.When these two rates diverges, disequilibrium is generated which becomes cumulative and causing trade cycle.
d) Business psychology : The psychological waves in business sector give rise to trend of business fluctuations in pervasive manner. Each phase of cycle generates a stare of psychology which sets in motion forces which causes a reversal of prevailing business conditions. Thus, behavior of businessman generates Cyclical investments in economic activity.
e) Innovations : An innovation may consist of introduction of new product, adoption of new method pf production, opening up of new market within a firm. Innovation spells a start for business cycle. As innovator steps up production circular flow in economy rises. A wave pf expansion in the economy follows. This ends soon as new products replace old ones which slowly gives rise to depression. As fresh investment take place, some of entrepreneur will again start innovating. Other follow him and investment surges up again which completes stage of trade cycles
f) Marginal efficiency of capital : it is defined as expected profitability pf investment of capital assets.It depends on two factors :
-prospective yields from investment
-surplus price
During the expansion phase of trade cycle, the profitability of investment must fall owing to three factors
-Diminishing marginal returns
-rise in cost of production of capital assets.
-rise in rate of interest
But here businessmen tend to ignore MEC because if over Optimus which give rise to contraction of period.Contraction period proceeds at rapid rate where the rate of interest rises and MEC continues to fall which further dampens investment. The process of recovery is slow after depression.
The time taken by the economy depends on three factors
-normal rate of growth
-time period of wearing out capital goods. Longer life of capital goods, longer it takes economy to recover.
-time taken to dispose accumulated stocks from boom period.
External factors.
External factors are those factors which operate from outside the economic system. These may be natural factors like weather condition, growth rate of population, civil wars, political crisis.
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