The Concept of the Business Cycle

The business cycle is a model used to describe short term fluctuations in economic activity using both Real GDP growth values compared to the time in years. The cycle flows through four phases: boom, downswing (contraction) , trough and upswing (expansion). As shown by the model, these phases repeat themselves roughly every 5 to 8 years. The trend line shows the Macroeconomic objective of GDP and the national goal to maintain 3¼% growth.