Contraction Business Cycle Definition

Expansion peak contraction and trough.

Contraction business cycle definition. The business cycle consists of the four following phases. Expansion peak contraction and trough. Expansion peak contraction and trough.

The business cycle goes through four major phases. One of the key questions asked is how long there is between phases. A speedup in the pace of economic activity defined by high growth low unemployment and increasing prices the period marked from trough to peak.

The upper turning point of a business cycle and the point at which expansion turns into contraction. An expansion is characterized by increasing employment economic growth and upward pressure on prices. In essence business cycles are marked by the alternation of the phases of expansion and contraction in aggregate economic activity and the comovement among economic variables in each phase of.

Expansion phases typically last around three to four years but may be longer or shorter. They typically last 17 5 months each. Then the cycle repeats itself.

This cycles through periods of economic growth and back into economic rececsion. During the expansion phase also called the recovery phase gross domestic product is growing business activity is flourishing and the economy is prospering. In other periods the economy experiences a contraction of activity.

In the business cycle there are 4 phases expansion peak contraction and trough. America s history of recessions shows that economic contractions are inevitable albeit painful parts of the business cycle. Business cycles are identified as having four distinct phases.