Definition
- Business cycle
- The business cycle is the economy's movement from peak to trough and trough to peak, as real GDP rises and falls around its long-run trend.
- Not to be confused with: Recession
- A recession is a significant decline in real GDP, lasting from the peak of the cycle to its trough.
Test yourself
What is the difference between business cycle and recession?
The cycle is the whole wave; a recession is only its falling part.