A business cycle is the term used to describe the fluctuation in the economy - the recession and expansion it goes through. Though business cycles are periodic, they are very irregular.
An economy grows, reaches a peak, then begins a downturn, followed by a period of negative growth (a contraction), that ends in a trough before the next upturn. These ups and downs in an economy are often referred to as business cycle.
All markets economies have periods when consumption-spending on goods and services-rises. Consumers buy more, companies invest more, and production, income, profit and employment increase. These periods are always followed by periods when investment and spending fall, and unemployment rises. This is the business cycle.
