The Economic Cycle
- Economies naturally move through repeating phases of growth and decline.
- This pattern is called the economic or business cycle, and includes:
- Expansion - economic growth
- Peak - highest potential
- Contraction - slowdown
- Trough - least potential
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Economics and politics student from Germany. Interested in a broad field of topics and trying to easily break down topics from his studies to everyone.
In this post I want to bring you closer to the different phases of the economic/business cycle. I will try to keep things simple and easy so you guys can understand the concept and see it in current or past developments.
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Similar ideas to The Economic Cycle
When this point is reached, the up-leg described above— the rising part of the cycle— is reversed.
• Losses cause lenders to become discouraged and shy away.
• Risk averseness rises, and along with it, interest rates, credit restrictions and covenant requirements.
• Less capital is made available— and at the trough of the cycle, only to the most qualifi ed of borrowers, if anyone.
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