Business cycles affect economic stability from "summary" of EBOOK: Macroeconomics by Rudiger Dornbusch,Stanley Fischer,Richard Startz
Business cycles, a recurring feature of market economies, can have a significant impact on economic stability. These cycles consist of alternating periods of expansion and contraction in economic activity. During an expansion, the economy grows, unemployment decreases, and incomes rise. Conversely, during a contraction, economic growth slows down, unemployment increases, and incomes decline. The fluctuations in economic activity caused by business cycles can lead to heightened uncertainty and instability in the economy. This uncertainty can deter businesses from making investments, consumers from spending, and lenders from providing credit. As a result, economic growth may be hindered, leading to decreased production, lower employment levels, and reduced incomes for individual...
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