What Is a Business Cycle?
Business cycles are a type of fluctuation found in the aggregate economic activity of a nation—a cycle that consists of expansions occurring at about the same time in many economic activities, followed by similarly general contractions. This sequence of changes is recurrent but not periodic.
The business cycle is also called the economic cycle.
Key Takeaways
- Business cycles are composed of concerted cyclical upswings and downswings in the broad measures of economic activity—output, employment, income, and sales.
- The alternating phases of the business cycle are expansions and contractions.
- Contractions often lead to recessions, but the entire phase isn’t always a recession.
- Recessions often start at the peak of the business cycle—when an expansion ends—and end at the trough of the business cycle, when the next expansion begins.
- The…