Business cycles are a natural part of economic growth from "summary" of Economics of Money, Banking and Financial Markets, Business School by Frederic S. Mishkin
Business cycles are an inherent feature of the economic landscape. These cycles represent fluctuations in economic activity over time, with periods of expansion followed by contractions. Understanding these cycles is crucial for policymakers, businesses, and individuals alike. During an expansion phase, economic activity is on the rise, leading to increased production, employment, and income. This period is characterized by optimism and confidence in the economy's prospects. Conversely, during a contraction phase, economic activity slows down, leading to decreased production, employment, and income. This period is characterized by pessimism and uncertainty about the economy's future. These fluctuations are driven by various factors, including changes in consumer spending, investment, government policies, and external shocks. While these cycles can be disruptive, they are a natural part of the economic growth process. Policymakers often intervene during downturns to stimulate economic activity through measures such as monetary and fiscal policy. Central banks may lower interest rates to encourage bo...
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