Answer to Question #50385 in Macroeconomics for abdulla sabit

Question

What is business cycle? Mention the phases of a business cycle with graphs."An economy may not go through all the phases of a business cycle if there is any government intervention in the economy"-Do you agree with the statement? Justify your answer.

Answer 1

The term business cycle (or economic cycle or boom–bust cycle) refers to fluctuations in aggregate production, trade and activity over several months or years in a market economy. The business cycle is the downward and upward movement of levels of GDP and refers to the period of expansions and contractions in the level of economic activities (business fluctuations) around its long-term growth trend. An economy will go through all the phases of a business cycle even if there is any government intervention in the economy, but these changes will be not so sharp, as without government regulation.