15 Days of Economics

Day 11: What is an economic cycle ?

The economic cycle is represented by a line graph showing the variables : time and GDP.n the cycle, a booms occur where growth increases at a rapid rate. When growth falls, a recession occurs when there are 2 successive quarters of negative growth. This is represented on the graph by a downwards gradient from recessions and upwards gradient from booms.

A boom refers to a period of increased commercial activity within either a business, market, industry, or economy as a whole. For an individual company, a boom means rapid and significant sales growth, while a boom for a country is marked by significant GDP growth.

A recession refers to a significant decline in economic activity spread across the economy.During a recession, unemployment rises, and prices sometimes fall in a process known as deflation. In addition to this there might be lower inflation and low demands for imports.

A recovery is when the economy starts improving after a recession.Rising consumer confidence, Higher housing prices, rising business confidence, higher investment, increase in construction and loose policy are all characteristics of a recovery.

These economic statuses are triggered by shocks in supply and demand from the government side or banking side. Even wars and natural disasters effect these shocks.