The Economic Cycle

All market economies experience fluctuations in economic activity over time. These fluctuations — known as the economic cycle (or business cycle) — are a central topic in macroeconomics and have profound implications for government policy, business decision-making, and individual welfare.

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The Four Phases of the Economic Cycle

The economic cycle describes the short-to-medium-term fluctuations of real GDP around its long-run trend rate of growth. There are four commonly identified phases: