Can you please explain the business cycle?

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Karyth Cara | College Teacher | (Level 1) Senior Educator

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The business cycle is a concept that encompasses the economic behavior of an entire economy over extended periods of time. The business cycle is a way of measuring and explaining historic behavior of a large economic system, like the economic system of a state, a country, a continent or even the global economy. To measure and define such large economies, specific measures of economic activity are compiled and analysed on various criteria.

Thus, knowing the purpose and scope of the business cycle, we can defin the business cycle as the movement of an economy through the various economic stages of economic extremes from economic expansion to economic depression. The various stages between and including the extremes are:

  • expansion or growth
  • peak
  • recession¬† or contraction
  • trough
  • recovery

Once thought to be regularly occurring cycles, these are now thought to be variably occurring cycles that depend upon many factors to precipitate each phase.

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