BUSINESS CYCLE

The business cycle refers to the recurring pattern of economic expansion and contraction. It comprises four phases: expansion, peak, contraction, and trough. During expansion, economic activity and employment rise, leading to increased consumer spending and investment. At the peak, economic growth reaches its maximum, often accompanied by inflationary pressures. Contraction follows, characterized by declining economic activity, falling production, and rising unemployment. Finally, the trough marks the bottom of the cycle, with economic activity at its lowest before the next expansion begins. Governments and central banks often implement policies to mitigate the negative effects of contractions and stimulate growth during recessions.