What is boom and bust cycle?

The boom and bust cycle is a process of economic expansion and contraction that occurs repeatedly. The boom and bust cycle is a key characteristic of capitalist economies and is sometimes synonymous with the business cycle . During the boom the economy grows, jobs are plentiful and the market brings high returns to investors.

What is a recurrent boom and bust?

Repeat. We refer to it by different names: boom and bust; expansion and contraction; growth and recession; and the proverbial bull and bear. What we’re talking about is the economic cycle, aka “business cycle.” Economic cycles are the recurrent boom-and-bust phases that markets and economies typically exhibit. Think of it like a wave:

How do governments respond to the boom and bust cycle?

Government interventions, such as lowering interest rates or implementing fiscal stimulus packages, play a pivotal role in mitigating the impact of the bust cycle and expediting recovery. The 2008 financial crisis provides an excellent example of such policy responses. Confidence plays an integral role in the dynamics of the boom and bust cycle.