© 2000 John Petroff
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© 2000 John Petroff |
B- Description of business cycle
It is well known that the business cycle is a process of repeated periods of economic expansion followed by economic recession. It is useful to distinguish within both expansion and recession two or even three separate phases because the end of an expansion is very different than the beginning, and likewise for the recession. Thus, after a trough, the economy starts moving in a recovery, leading to the expansion itself, and ending in overheating. After a peak, the economy slides into a downturn, leading to a contraction, and resulting in recession. We have already seen in Chapter 13 Section D how business cycles affect almost all industries. That in itself is an important characteristic of the business cycle: it spreads to practically every aspect of the economy, and is a process that feeds upon itself. We have noted that there are other cycles that are specific to certain regions, industrial processes and products. Here, the business cycle affects everyone in a country, but naturally not to the same extent and not simultaneously.
See review questions Q-15B.1 to Q-15B.2.
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