Business Cycle

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What is a Business Cycle? Explain what happens to Economic growth and Consumption at each stage of the cycle. At which stage of the Business cycle is your firm right now and why?

Business cycles are the cyclical movements in the economy. During an expansion, output and employment rises and unemployment falls. At this stage consumption increases. Peak is the highest form of expansion where there is a very high GDP growth and low unemployment. There may be furious rise in inflation due to rapid expansion and at peak situation. Consumption is at its highest point at Peak stage.
On the other hand during a contraction/recession, there is a decline in the output of goods and services. Burns and Mitchell defined a recession as a period when a broad range of economic indicators falls for a sustained period, roughly at least half a year. Consumption declines at this stage. Trough is the nadir ...