Business CyclesBusiness cycles are the "ups and downs" of economic activity, defined in terms of periods of expansion or recession. “Business cycles occur because disruptions to the economy of one sort or another push the economy above or below full employment. Inflationary booms can be generated by increases in private or public spending (Roomer, Christina D). The phases of the economic cycle are the prosperity phase: expansion or boom, where an increase in production and prices occurs, and a decrease in interest rates. Recession phase: from prosperity to recession, where a decline in prices and activity occurs with an increase in unemployment and interest rates. Depression phase: Contraction of the economy, which usually begins with capital markets colliding with bank and corporate failures. Recovery phase: from depression to prosperity (lower inflection point), which begins when stocks recover from falling prices and earnings. The prosperity phase of a business cycle is the peak point of the business cycle. It is also called the woodpecker. At this stage, full employment in the economy, that is to say all employed and productive people, reaches its highest level. Since there is no more labor or production capacity left, there is no more economic growth. “The characteristics of prosperity are a high level of production and trade, a high level of effective demand, a high level of income and employment, rising interest rates, inflation, a broad expansion of bank credit, business optimism and a high level of MEC (marginal efficiency of capital). ) and investment (Brian Bass). The level of production is maximum and there is an increase in GNP (Gross National Product). On the other hand, the recession phase is when economic activity slows down. At this stage, production, investment, trade and...... middle of paper... decreases (fluctuations) in recurring global economic activity (in most economic sectors) over the course of a given period. These do not appear in the same way depending on the period, because their intensity, duration or behavior can vary, but all are characterized by phases of increase and decrease. Works Cited Growth and production, gross domestic product Margaret Jacobson, Filippo Occhino. Economic Trends February 2013 p3 (2) (568 words) Romer, Christina D. “Business Cycles.” : The Concise Encyclopedia of Economics. Liberty Fund, Inc., nd Web. February 25, 2014.Gaurav Akrani, Gaurav. “4 phases of the business cycle in economics with diagram”. 4 phases of the business cycle in economics with diagram. Kanlyan City Life, June 18, 2011. Web. February 26, 2014. Bass, Brian and Demand Medina. “What is prosperity in the economic cycle?” » Small business. HearstNewspapers, LLC, and Web. February 26. 2014.