the bussiness cycle

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  • The business cycle is the periodic but irregular up-and-down movements in economic activity,measured by fluctuations in real GDP and other macroeconomic variables.

    A business cycle is not a regular,predictable,or repeating phenomenon like the swing of the pendulum of a clock.Its timing is random and,to a large degress,unpredictable.A business cycle is identified as a sequence of four phases:

    1 Contraction (A slowdown in the pace of economic activity)

    2 Trough (The lower turning point of a business cycle,where a contraction turns into an expansion)

    3 Expansion (A speedup in the pace of economic activity)

    4 Peak (The upper turning of a business cycle)

    A recession occurs if a contraction is severe enough...A deep trough is called a slump or a depression.The difference between a recession and a depression,which is not well-understood by non-economists