Unexpected events that drive economic cycles and fluctuations are called economic

Expert Solution

Unexpected events that drive economic cycles and fluctuations are called economic shocks. These events can be seen as a stimulus which brings about changes in the smooth walk of the economic system. The fluctuations/ cycles caused can be seen into 4 stages namely:

1.) expansion: where the organization or the body is indulged into Growth and is developing.

2.) boom: this is the point where the firm earns the maximum profit and is standing at the peak.

3.) recession: the earnings or the profit now starts to fall and in deteriorating with time.

4.) depression: the lowest point where the growth is stopped and is at the least earning point.

These are the events which are caused by:

- sudden recession due to any natural calamity

- an immense downfall of the economy like excessive inflation

- debt trap which has caused the economy to become corrupt and unstable

Such events are called as Economic Shocks.

Rahul Sunny answered 2 years ago

relationship that exists in the fluctuations of the stock market and economic cycles. Thank you

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