What's it: Real business cycle is the economy's fluctuation due to shocks from real factors instead of aggregate demand shocks. The new classical economists proposed this model and considered fluctuations in the aggregate supply as the
Business Cycle
Economic Crisis: Types and Effects
What's it: An economic crisis refers to a condition in which the economy is shaken unexpectedly and rapidly spreading. The trigger can take various forms, such as a debt crisis, a banking crisis, an asset bubble burst, and a balance of
Economic Collapse: Signs, Causes, and Examples
What's it: An economic collapse is a shock to a country's economy, usually when a crisis is widespread. The decline may have been preceded by a debt crisis, currency crisis, war, and supply shocks. The economy then enters a period of
Economic Depression: Causes, Examples, Effects, Possible Solutions
What it is: An economic depression is a prolonged period of decline in economic activity, worse than a recession. A recession occurs when economic growth falls for two consecutive quarters and can last up to three years, such as in the
Economic Recession: Causes, Effects, and Possible Solutions
What's it: An economic recession is a period more severe contraction in which real GDP is negative for two consecutive quarters and can last until three years. A severe recession we call depression. Depression lasts longer than a
Economic Recovery: Meaning, Types, and Characteristics
What it is: An economic recovery is the initial part of the expansion, where the economy gained strength returned to growth after the recession. Economic growth is showing signs of strengthening. Consumer spending is starting to
Trough Phase of the Business Cycle: Meaning and Characteristics
What's it: Through phase is the lowest point of the business cycle. It occurs when the recession reaches its deepest point before leading to economic recovery and expansion. The business cycle is up and down phases of economic
Economic Boom: Meaning, Characteristics
When an economic boom occurs, you will see the economy grows at a rapid rate. It is the final phase of expansion, before heading for the peak. For policymakers, this phase is an alarm for them. A boom can lead to an overheated economy
Economic Contraction: Meaning, Causes and Impacts
Economic contraction occurs when aggregate economic activity decreases. Aggregate output measures, such as real GDP and industrial production, show a decline compared to the previous period. If real GDP falls in two consecutive quarters,
Peak Phase of the Business Cycle: Meaning, Characteristics
What it is: The peak phase is the highest point of the business cycle. It was a turning point after an economic expansion had slowed but before moving towards contraction. In the boom part, the economy is trying to reach its maximum
Business Cycle: Meaning, Causes, Phases
Business cycle is repeated ups and downs phases in economic activity, which is divided into several stages: contraction, trough, expansion, and peak. Each stage has a varying duration and introduces uncertainty in economic decisions. Why