whatever Essays - Business Cycle, Geoffrey H. Moore, Capitalism

BUSINESS CYCLE A business cycle is the periodic but irregular up and down movements in economic activity, measured by fluctuations in real GDP or gross domestic product and other macroeconomics variables. It is not a predictable or repeating phenomenon like the ticking of a second hand on a clock. Its timing is random and unpredictable. A business cycle describes the phases of growth and decline in an economy. A business cycle is a sequence of four: contraction, trough, expansion and peak. A contraction is a slowdown in the pace of economic activity, a trough is the lower turning point of a business cycle, usually a recession, where a contraction eventually turns into an expansion, expansion is a speedup in the pace of economic activity, and finally the peak which is the upper turning of a business cycle. ?The goal of economic policy is to keep the economy in a healthy growth rate ? fast enough to create jobs for everyone who wants one, but slow enough to avoid inflation. Unfortunately, life is com plex and many factors can cause an economy to spin out of control, or settle into a depression. The most important, factor is confidence ? that of investors, consumers, businesses and politicians. The economy grows when there is confidence in the future and in policymakers, and does the opposite when confidence drops?, states Kimberly Amadeo of Guide.com.