Business cycle is the regular pattern of fluctuations in economic activity.
The usual pattern of the business cycle is: bust, recovery, boom and recession. The levels of economic growth, employment, and inflation are directly affected in each of the phases of the business cycle. The business cycle has an impact also on corporate earnings and cash flows.
The movements in the business cycles are not always regular and predictive. This is why it is difficult to forecast the business cycle.
Many developments and indicators are cited as causes of the business cycles. The most common ones, however, are: over-investment, under-consumption, fluctuations in agricultural output, the interaction of the multiplier and accelerator, war and international politics.
Also see:· acceleration principle