The phase of recovery of trade cycle: Depression gives place to recovery. There is revival of business and economic activity. There is greater demand for goods and services and consequently there is greater production. Prices, wages, interests and profits all start rising. Employment increases and so docs the national income. There is increase in investment, bank loans and advances, velocity of circulation of money due to more brisk tide. Through multiplier and acceleration effects, the economy is proceeding upward steadily and rapidly. The process of revival and recovery becomes cumulative. Increased receipts result in increased expenditure causing further increase in n:cents. which in turn, result in further increased expenditure and so on. The wave of recovery once initiated soon begins to feed upon itself.
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