Terms

Cycles

Cycles

Cycles refer to economy-wide alternation of the phases of expansion and contraction in aggregate economic activities, characterized by the comovement among economic variables. It is the downward and upward movement of the GDP around its long-term growth trend, production, trade, and general economic activity. The business cycle goes through four major phases: expansion, peak, contraction, and trough. These cycles have recognizable indicators despite it not occurring at regular intervals. The cycles are useful tools for analyzing the economy, as they help people make better financial decisions.