What is the economic cycle?

The economic cycle or business cycle concerns the recurring but irregular fluctuations of the aggregated economy between growth or expansion periods and a period of contraction or recession. Four different phases of activities have expanded for years - trough, expansion or recovery, peak and recession or contraction - form a business cycle. Only flat points on the cycle, peak and trough represent maximum and minimum points of economic strength, while recession and expansion are moving periods of economic cycle that reflect trends in the financial climate and measure the direction of the economy. The National Economic Research Office measures the overall health of the economy and determines whether the United States is in expansion, recession or transition between them by analyzing various factors, such as levels of persons, employment levels, sales volumes and industrial production.

Expansion or economic recovery is a period of economic cycle, during which the economy will climb from the trough to the top, characterized by an increase in business activities and the extension of the gross DOMŽída Product. Recovery varies for duration from one to ten years, with most to three to four years. After the growth period, the economy will start with maximum capacity with employment and wages reaching the highest level and a gross domestic product at the top of the upper limits. At this point, the growth curve flattens and then the decreasing down begins, while the level of income and employment decreases. With wages and prices of goods somewhat resistant to changes, the economy slows down on average for six to 18 months until it is thrown to the riverbed.

Economic indicators are statistics used by investors and the National Economic Research Office to predict how well Economy will do this in the future. Procyclic indicators such as GDP, shift in the same direction as the economy, while anti -cyclic indicators such as unemployment rates are in the opposite direction of the economy. Indicators can also lead, lag or coincide, depending on whether the factors are changing before, after or at the same timewith an economy. Every month, the United States Congress publishes seven wide categories of economic indicators, including information on total production, income and expenditure. Other important factors include wages, unemployment, security and credit markets and federal finances.

The mainstream economy experts argue that the question of whether economic cycles occur due to internal causes in the capitalist system, such as overproduction and poor consumer expenditure, or whether external factors such as wars or natural disasters, shock the system and cause fluctuations. The debate has significant consequences on government policy. Supporters that internal factors cause the support of the economic cycle has increased government intervention and regulation. Proponents of the internal causes of the economic cycle of less intrusion of government and regulation. The direct result of political decisions is alternatively another set of models.