Business Cycle

The business cycle refers to the natural fluctuations in economic activity that an economy experiences over time. It consists of four main phases: expansion (growing economy with rising output and employment), peak (the highest point of activity), contraction (a slowdown characterized by falling output and rising unemployment), and trough (the lowest point, leading to recovery). These cycles can be influenced by various factors, including consumer demand, investment, and government policies. Understanding the business cycle helps businesses and individuals make informed decisions about spending, investing, and saving during different economic phases.