What are the 4 phases of the business cycle?

The four stages of the cycle are expansion, peak, contraction, and trough. Factors such as GDP, interest rates, total employment, and consumer spending, can help determine the current stage of the economic cycle. Insight into economic cycles can be very useful for businesses and investors.

What is a trough in the economic cycle?

The trough is the bottoming process of moving from contraction, or declining business activity, to recovery, which is increasing business activity. A trough is the stage of the economy’s business cycle that marks the end of a period of declining business activity and the transition to expansion.

What is the period between the peak and trough of a business cycle called?

A recession is the period between a peak of economic activity and its subsequent trough, or lowest point. Between trough and peak, the economy is in an expansion. Expansion is the normal state of the economy; most recessions are brief.

What happens in the trough phase of the business cycle?

As discussed above, in trough phase, an economy reaches to the lowest level of shrinking. This lowest level is the limit to which an economy shrinks. Once the economy touches the lowest level, it happens to be the end of negativism and beginning of positivism. This leads to reversal of the process of business cycle.

What is the business cycle and when does it occur?

It occurs when the recession reaches its deepest point before leading to economic recovery and expansion. The business cycle is up and down phases of economic activity. Consecutively, it consists of the contraction, trough, expansion, and peak phases.

What are the four phases of the business cycle?

The four primary phases of the business cycle include: Expansion: A speedup in the pace of economic activity defined by high growth, low unemployment, and increasing prices. The period marked from trough to peak. Peak: The upper turning point of a business cycle and the point at which expansion turns into contraction.

What happens to the economy after the trough stage?

After the trough, the economy moves to the stage of recovery. In this phase, there is a turnaround in the economy, and it begins to recover from the negative growth rate. Demand starts to pick up due to low prices and, consequently, supply begins to increase.