Economic cycle

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Economic Cycle

The period of time during which an economy evolves from a state of health to fragility to recession to recovery and back to health. Every capitalist economy has cycles to a greater or lesser extent. However, regulations may be designed to curtail them (or, more accurately, to attempt to maximize the good times while preventing the bad times); this is rarely successful. Factors affecting economic cycles include the level of inflation, the availability of capital, natural disasters, and political events. Some industries are considered countercyclical, meaning that demand for their products remains relatively constant regardless of economic circumstances; some even do better in recessions. Other industries, mainly those considered luxuries, are greatly dependent on economic cycles. An economic cycle is often colloquially called a boom-and-bust cycle.

Economic cycle.

An economic cycle is a period during which a country's economy moves from strength to weakness and back to strength.

This pattern repeats itself regularly, though not on a fixed schedule. The length of the cycle isn't predictable either and may be measured in months or in years.

The cycle is driven by many forces -- including inflation, the money supply, domestic and international politics, and natural events.

In developed countries, the central bank uses its power to influence interest rates and the money supply to prevent dramatic peaks and deep troughs, smoothing the cycle's highs and lows.

This up and down pattern influences all aspects of economic life, including the financial markets. Certain investments or categories of investment that thrive in one phase of the cycle may lose value in another. As a result, in evaluating an investment, you may want to look at how it has fared through a full economic cycle.

References in periodicals archive ?
The IMF is pushing Pakistan to embrace a more flexible rupee policy to end repeated boom-and-bust cycles, with many analysts arguing that the local currency is overvalued, Geo News reported.
The country's dependence on election spending to boost economic growth has given rise to the so-called boom-and-bust cycles.
Now, researchers at NASA have used a laser-based instrument on board its Cloud-Aerosol Lidar and Infrared Pathfinder Satellite Observation (CALIPSO) satellite launched in 2006 to understand the boom-and-bust, or peak and decline, cycle of these tiny organisms.
These areas contain both long-term residents who are less geographically mobile and temporary workers who are highly mobile and move with the boom-and-bust cycle.
Assabgui and Fuller presented on the boom-and-bust cycles of mining alongside fellow industry leaders, at the sixth annual Mining Day at Laurentian University in Sudbury.
The book's thesis is that the United States goes through a boom-and-bust cycle in these fields, driven by lobbyists seeking more visas for foreign workers.
The volatility of the boom-and-bust cycle can be difficult for a community to overcome.
STEM may not always bear fruit, but isn't it better to cultivate one for a career in a boom-and-bust field rather than push them toward a job where the prospects are even more dim?
This regulation aims to regulate the market to avoid another boom-and-bust cycle.
Dubai -- The UAE is getting an economic boost from tourism and a recovery in its real estate market, butDubai still has high debt levels, and the emirate should take steps to fix its government budget and avoid another boom-and-bust cycle, the International Monetary Fund (IMF) said in a new report on the country.
Writing in terms accessible to most general readers and policy makers, contributors blame the housing bubble, boom-and-bust cycle, and wide swings in economic activity on the destabilizing policies of the US Federal Reserve.
STAY-AT-HOME Brits have sent sales of traditional board games soaring, with boom-and-bust Monopoly the top seller.