Unexpected events that drive economic cycles and fluctuations are called economic

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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 1 year ago

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