Video:What Is the Business Cycle?with Mike Moffatt
The business cycle is the periodic movement of economic activity. Learn more about the business cycle and what its different elements mean.See Transcript
Transcript:What Is the Business Cycle?
Definition of a Business CycleParkin and Bade's text "Economics" gives the following definition of the business cycle: The business cycle is the periodic but irregular up-and-down movements in economic activity, measured by fluctuations in real GDP and other macroeconomic variables.
Parkin and Bade go on to explain: A business cycle is not a regular, predictable, or repeating phenomenon like the swing of the pendulum of a clock. Its timing is random and, to a large degree, unpredictable.
Phases of a Business CycleA business cycle is identified as a sequence of four phases:
- Contraction: A slowdown in the pace of economic activity
- The lower turning point of a business cycle, where a contraction turns into an expansion
- Expansion: A speedup in the pace of economic activity
- Peak: The upper turning of a business cycle
Thanks for watching, to learn more visit About.com.
About videos are made available on an "as is" basis, subject to the User Agreement.