What is economic cycle & why is it important?

An economic cycle, also known as a business cycle, refers to economic fluctuations between periods of expansion and contraction. Factors such as gross domestic product (GDP) , interest rates, total employment, and consumer spending can help determine the current economic cycle stage.

Is a business cycle an example of an economic cycle?

The business cycle is an example of an economic cycle . Business cycles are comprised 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 (also called recessions).

What are the four stages of economic cycle?

Economic cycle. Figure 2. Boom and bust. Economic cycles are identified as having four distinct economic stages: expansion, peak, contraction, and trough. An expansion is characterized by increasing employment, economic growth, and upward pressure on prices.

What factors determine a phase of a economic cycle?

Factors to indicate the stages include gross domestic product, consumer spending, interest rates, and inflation. The National Bureau of Economic Research (NBER) is a leading source for indicating the length of a cycle. What Happens in Each Phase of the Economic Cycle?