Business Cycle - Business concept of the day

Definition: Business Cycle is also referred to as economic cycle and trade cycle. It is the downward and upward movement of a country's GDP across its long-term growth trend. It is a period of a single boom (upward) and contraction (downward) in sequence. Business cycle can be referred to as fluctuation of economy over a period of time. Effects of business cycles are managed by governments through fiscal policies and monetary policies. 

Example: In 2008, the economy contracted by 2.8% immediately in the first quarter and rebounded by 2.1% in the next quarter. One would think that the economy is recovering, however the business cycle reversed into contraction and continued till end of the year. 

Business Insight: A decent understanding of the 4 critical stages of a business cycle can help a business foresee its performance based on the stage of the business cycle and plan activities accordingly.