Question

How can shifting from agriculture to manufacturing and mining significantly change the business cycle?

Answer 1

Changes in business cycles in an economy means shifts in its gross domestic product relating to a long term trend. As an economy shifts from agriculture to manufacturing/mining, it impacts the business cycle of the economy in several ways :

• The output of the economy, its growth and the way it is measured laregly changes.
• Changes in employment trends ( from the economy being labour intensive to capital intensive) leads to changes in employment figures, wages, and thus the GDP
• As the processes of manufcaturing and supply of products changes, the prices of goods also change, thus impacting the market.
• Shifts from agriculture to manufacturing also impacts the amounts of imports and exports in the economy, thus impacting the GDP

Thus all these factors together lead to significant changes in the business cycle in the long term.