The business cycle is the periodic

The business cycle is the periodic but irregular up-and-down movement in economic activity, measured by fluctuations in real gross domestic product (GDP) and other macroeconomic indexes. The financial media generally considers that two consecutive quarters of negative GDP growth indicate a recession. Used as such, the GDP is a quick and simple indicator of economic contractions. However, GDP is reported only on a quarterly basis, while the business cycle is tracked on a monthly basis. So, the following indicators are also used: employment, personal income, and capacity utilization rate.
A business cycle is typically characterized by four phases - expansion, peak, contraction and trough - that repeat themselves over time. Economists note, however, that complete business cycles vary in length. The duration of business cycles can be anywhere from about two to twelve years, with most cycles averaging six years in length. Some business analysts use the business cycle model and terminology to study and explain fluctuations in business inventory and other individual elements of corporate operations. But the term "business cycle" is still primarily associated with larger (industry-wide, regional, national, or even international) business trends.

STAGES OF A BUSINESS CYCLE

Expansion
The expansion phase of the business cycle represents a period of economic growth. This phase includes an increase in the number of jobs available and an increase in the cost of goods. As employers hire new employees, a corresponding increase in earned income enables working consumers to afford items produced by businesses. As demand for their products grows, businesses produce more goods during the expansion stage of the business cycle. During an expansion stage, an economy normally produces a GDP indicating high levels of efficiency.
Peak
The peak stage of the business cycle follows an expansion phase. The peak stage demonstrates the height of the expansion phase. In a peak phase, an economy experiences little or no unemployment. The cost of goods continues to increase, but not as rapidly as in the expansion phase, as production levels satisfy consumers' demand for goods almost exactly. The business cycle's peak stage shows a high GDP during its length. However, an economy's peak stage is normally recognized after it has ended. Only a decrease in GDP distinguishes a peak stage from its predecessor, the expansion phase.
Contraction
The contraction phase of the business cycle represents the opposite of the expansion stage. Employers cause an increase in an economy's unemployment by reducing the number of their employees. As workers lose their jobs, earned income decreases and non-working consumers can no longer afford goods produced by businesses. An economy's GDP will be lower during the business cycle's contraction phase than during the cycle's expansion and peak stages. If GDP falls for consecutive quarters, the contraction stage experienced by an economy may be a recession.
Trough
The business cycle's trough stage directly contrasts its peak phase. During a trough stage, an economy experiences a high unemployment rate. Increases in the cost of goods do not occur as consumer demand and confidence levels remain low. Similar to a peak phase, a trough stage can only be recognized after it passes. A trough stage will be identified by a decrease in an economy's GDP when compared with its level during the preceding contraction phase. If an economy's GDP decreases or remains at a low level for an extended number of fiscal quarters, the economy's trough stage may be a depression.

A notable example of economic depression is the Great Depression. The timing of the Great Depression varied across nations, but in most countries it started in 1930 and lasted until the late 1930s or middle 1940s. It was the longest, most widespread, and deepest depression of the 20th century. The depression originated in the U.S., after the stock market crash of October 29, 1929 (known as Black Tuesday).
The depression had devastating effects in both the industrialized countries and those which exported raw materials. Personal income, tax revenue, profits and prices dropped, while international trade plunged by more than 50%. Unemployment in the U.S. rose to 25% and in some countries rose as high as 33%.
Cities all around the world were hit hard, especially those dependent on heavy industry. Construction was virtually halted in many countries. Farming and rural areas suffered as crop prices fell by approximately 60%. Some economies started to recover by the mid-1930s. In many countries, the negative effects of the Great Depression lasted until the end of World War II.
There have been numerous other economic depressions which were either small in magnitude or were limited to few nations. For example, Russia was hit by very severe depression in the 1990s. The 2010s depression in Greece is one of the most recent examples.

Business cycles pla