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Business Cycles& the British Economy - What are business cycles?
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| Submitted: Mon Dec 22 2003
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Business Cycles & the British Economy What are business cycles? Business cycles, economic cycles or trade cycles as they are sometimes called, are defined by the Longman Dictionary of Business English, as "a cycle in time during which trade moves from a state of high activity (boom, prosperity) through a running-down period (contraction, downsizing, recession, slump, downturn) to a state of low activity (depression, stagnation, trough), then upward again when business improves (expansion, recovery, revival) until there is a return to high activity once more. The whole cycle then begins again." (Adam 1982 p.138) But what does this actually mean? In Fig. 1 below you can see a theoretical business cycle, which shows the trending and actual output or aggregate demand, of a country, over time. Fig.1 Aggregate demand is the sum of Consumer spending (C), Government spending (G), Investment (I) and Exports (X) (minus Imports (Z)); represented as C + G + I +...
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