A business cycle, sometimes called a “trade cycle” or “economic cycle,” refers to a series of stages in the economy as it expands and contracts. Constantly repeating, it is primarily measured by the rise and fall of gross domestic product (GDP) in a country.
How is the amplitude of a business cycle measured?
The amplitude of these cycles can be measured by the range of medium-term fluctuations which are also presented in the damping factors.
What is a turning point in a business cycle?
Turning points are called peaks-the period immediately pre- ceding a decline in real activity, or recession-and troughs-the pe- riod immediately preceding an upturn, or expansion.
How are the fluctuations in the business cycle measured?
These fluctuations typically involve shifts over time between periods of relatively rapid economic growth ( expansions or booms) and periods of relative stagnation or decline (contractions or recessions ). Business cycles are usually measured by considering the growth rate of real gross domestic product.
How are the stages of the business cycle determined?
Who Measures the Business Cycle. The National Bureau of Economic Research determines business cycle stages using quarterly GDP growth rates. It also uses monthly economic indicators, such as employment, real personal income, industrial production, and retail sales.
How is the expansion measured in the business cycle?
Measuring the Business Cycle. Expansion is measured from the trough (or bottom) of the previous business cycle to the peak of the current cycle, while a recession is measured from the peak to the trough. The National Bureau of Economic Research (NBER) determines the dates for business cycles in the United States.
How does the government manage a business cycle?
A business cycle is the periodic growth and decline of a nation’s economy, measured mainly by its GDP. Governments try to manage business cycles by spending, raising or lowering taxes, and adjusting interest rates.
