Economics Gdp Questions
The business cycle refers to the fluctuation in economic activity over time, characterized by alternating periods of expansion and contraction in the overall level of economic output, or Gross Domestic Product (GDP). It is typically composed of four phases: expansion, peak, contraction, and trough. During an expansion, economic output and employment levels increase, leading to higher consumer spending and business investment. The peak represents the highest point of economic activity before a contraction occurs. In a contraction, economic output and employment levels decline, leading to reduced consumer spending and business investment. The trough represents the lowest point of economic activity before the cycle starts again with an expansion. The business cycle is a natural occurrence in market economies and is influenced by various factors such as changes in consumer and business confidence, government policies, and external shocks.