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Analysis of the Business Cycle. What is the Business Cycle and what factors causes the changes in the Business Cycle?

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Analysis of the Business Cycle. What is the Business Cycle and what factors causes the changes in the Business Cycle?

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What is the business cycle:

In layman terms, business cycle can be defined as the irregular ups and downs on a periodic basis in the business or economic activity. For example, the ongoing recession in the US and slowdown in the global economy is one of such ups/downs of the business cycle. Such ups and downs are largely measured by economic indicators such as real GDP and host of other macroeconomic variables.

A business cycle is difficult to predict as it is not a repeatitive or regular phenomenon. Its timing is uncertain. It is precisely the reason why it is so difficult to predict that how long the current recession will last in United States.

A business cycle is identified as a sequence of four phases:

Contraction (A slowdown in the pace of economic activity)

Trough (The lower turning ...

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Sandeep Bardia, MBA
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  • BCom, SGTB Khalsa College, University of Delhi
  • MBA, Rochester Institute of Technology
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