What Are The Four Phases Of The Business Cycle
Olivia Luz
This cycles through periods of economic growth and back into economic rececsion.
There are basically two important phases in a business cycle that are prosperity and depression. In the diagram above the straight line in the middle is the steady growth line. Business cycles are identified as having four distinct phases. The four primary phases of the business cycle include.
Business cycle phase 1. This is the most critical and fearful stage of a trade cycle. The four stages of the business cycle are expansion peak contraction and trough. Below is a more detailed description of each stage in the business cycle.
After the peak point is reached there is a declining phase of recession followed by a depression. The four phases of business cycles are shown in the following diagram the business cycle starts from a trough lower point and passes through a recovery phase followed by a period of expansion upper turning point and prosperity. A recession is the substantial decline of economic activity that lasts longer than a few months. The other phases that are expansion peak trough and recovery are intermediary phases.
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The business cycle moves about the line. Expansion represents a period of growth the expansion phase of the business cycle represents a period of economic growth. Business cycle fluctuations occur around a long term growth trend and are usually measured by considering the growth rate of real gross domestic product. Stages of the business cycle.
The business cycle goes through four major phases. The following points highlight the four main phases of a trade business cycle. During this phase the economy is weakening. Business cycle phases in the business cycle there are 4 phases expansion peak contraction and trough.
One of the key questions asked is how long there is between phases. All businesses and economies go through this cycle though the length varies. The upper turning point of a business cycle and the point at which expansion turns into contraction. Figure 2 shows the graphical representation of different phases of a business cycle.
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The period marked from trough to peak.
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