Business Cycle

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Definition: Business Cycle

Business Cycle refers to the alternations or the fluctuations in the economic activities over a period of time. The business cycle can change because of generic economic activity in country/domain or may be because of seasonality.

Broadly these variations are of two types- expansion and contraction. However, a typical classification divides it into 4 phases which are-

1 Expansion Phase: In this phase, expansion or growth takes place.

2 Prosperity (Peak) Phase: This is the phase in which the peak is attained and the business remains there for a period.

3 Contraction Phase: The start of the downfall of business in terms of sales, revenues and other parameters.

4 Trough Phase: As opposite to Peak, this is the lowest point after the cycle repeats.

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