Phases of Business Cycle

The business cycle describes the fluctuations in economic activity over time. It has four main phases: Expansion, when the economy grows, jobs increase, and spending rises; Peak, the highest point where growth slows but remains strong; Contraction, when activity slows, unemployment rises, and spending decreases; and Trough, the lowest point before the economy begins to recover. These cycles repeat, reflecting changes in production, employment, and overall economic health, helping businesses and policymakers plan and respond effectively.