Business cycle and its growth followed by economic contraction the amount of time it takes a business to produce products in the following way.
Explanation:
The business cycle is the periodic but irregular up-and-down movement in economic activity, measured by fluctuations in real gross domestic product (GDP) and other macroeconomic variables.
A business cycle is typically characterized by four phases—recession, recovery, growth, and decline—that repeat themselves over time.
Economists note, however, that complete business cycles vary in length. The duration of business cycles can be anywhere from about two to twelve years, with most cycles averaging six years in length.
FACTORS THAT SHAPE BUSINESS CYCLES
Volatility of Investment Spending
- Variations in investment spending is one of the important factors in business cycles. Investment spending is considered the most volatile component of the aggregate or total demand (it varies much more from year to year than the largest component of the aggregate demand, the consumption spending), and empirical studies by economists have revealed that the volatility of the investment component is an important factor in explaining business cycles in the United States.
Momentum
Technological Innovations
Variations in Inventories
Fluctuations in Government Spending
Politically Generated Business Cycles
Monetary Policies
Fluctuations in Exports and Imports
