EconGuru Economics Guide » Business cycle

Business cycle

Business cycle, or economic cycle is a recurring sequential pattern of aggregate economic activity typically characterized by recession, recovery, growth or expansion, reflecting the fluctuation of economic performance. Business cycles usually last 2 to 10 years, varying in frequency, magnitude and duration.

Aggregate economic activity is indicated by GDP, which in turn, is largely affected by aggregate demand, unemployment and so forth.

Possible causes of business cycles include:

• Political power
• Rise and decline in supply of labor due to workers illusions
• Innovation
• Monetary supply
• Supply shocks