Business Cycle A business cycle reflects the rise and fall of economic activity Five Stages: peak, recession, trough, recovery, and expansion Depression is not a normal stage of the business cycle

PEAK very top of that cycle, It is at this point that real GDP spending in an economy is at its highest level.

TROUGH Very low point of that cycle, marks the end of a period of declining business activity and the transition to expansion.

RECESSION (Area shaded BLUE) RECESSION (Area shaded BLUE) At least 2 consecutive quarters of negative growth, normal part of the business cycle, generally lasts from six to 18 months.

RECOVERY (Area shaded White) Period in a business cycle when economic activity picks up and the GDP grows, leading into the expansion phase of the cycle

Expansion (Area shaded GREEN) It is a period when business activity surges and gross domestic product expands until it reaches a peak

All the stages can be summed into 2 types: Economic Expansion- anytime the economy is getting better and growing Economic Contraction- economy is getting worse and not growing