Economic Cycles: Study the Phases of Business Cycles – Expansion, Peak, Contraction, and Trough
Economies, much like the natural world, go through cycles. These cycles—periods of growth and decline—are known as economic or business cycles . Understanding these fluctuations is essential to grasp the overall rhythm of economic activity and how it impacts businesses, workers, consumers, and governments. In this blog, we’ll break down the four key phases of the economic cycle: expansion, peak, contraction , and trough , along with their significance, causes, and impact on the economy. What is an Economic Cycle? An economic cycle refers to the recurring pattern of expansion and contraction in economic activity over time. These fluctuations are usually measured by changes in indicators like Gross Domestic Product (GDP) , employment levels , consumer spending , and investment . Though business cycles are irregular in terms of their length and intensity, the sequence of the phases generally remains consistent. 1. Expansion: The Growth Phase The expansion phase marks a period of incre...