A business cycle is the ongoing variations in the level of general economic activity. During growth periods, several aspects of the economy are expanding, such as employment and income levels. During declining periods, these same measures will drop below their previous high points. The amount of expansion in a business cycle is measured from the lowest point in the previous cycle to the highest point in the next cycle. Conversely, the depth of a recession is measured from the highest point in the previous cycle to the lowest point in the next cycle. The general trend of economic activity is expansion, which is driven by such factors as increases in the population, productivity, and international trade. Declines occur when there have been speculative bubbles that cannot be maintained, or when there is a jolt to the system, such as a massive government loan default.
The business cycle is also known as the economic cycle.