Question

What is a business cycle and what are the different parts of a business cycle?

Answer 1

Business cycle in simple terms tells about the economic activity of an economy over the period of time

it has generally 6 stages-

1.Expansion- in this stage there is a positive growth of the economy such as employment ,wages ,profit ,demand ,supply etc.

2.Peak- in this stage the growth reaches at its saturation point or maximum point

3.Recession-it is the third stage after the peak phase

In this the demand for the good slightly decreases and there is excess supply in the market

4.Depression- this is the worst situation of recession in which there is a high unemployment and economic growth declines

5.Trough- is the lowest point of the the economy in which it is worst performing

6.Recovery -In this final stage the economy comes to recovery and turnaround from the trough and again start to grow and this cycle continues.