The business cycle describes the rise and fall of the production of goods and services in an economy. It is a set of economic phenomena that occur at a certain time or period, depending on when the economy is. Business cycles are generally measured using the rise and fall of real gross domestic product (GDP), adjusted for inflation, which includes the output of households, nonprofits and the public sector. , as well as business production.

The business or production cycle should not be confused with market cycles, measured using broad stock indexes, or with the debt cycle, which refers to the rise and fall of household and government debt.

The 4 phases of the economic cycle are as follows:

1) Peak or peak: phase of the business or economic cycle in which real GDP reaches its maximum after increasing during its recovery.

2) Recession or contraction: decline in the business cycle during which real GDP declines.

3) Floor or bottom: phase of the economic cycle in which real GDP reaches its minimum after decreasing during a recession.

4) Recovery or expansion: Rise in the economic cycle during which real GDP increases.

To complement the concepts of the 4 phases of the economic cycle, it should be mentioned that real GDP is the value of the production of final goods and services produced in a country during a year, taking into account constant prices.

The causes that provoke changes from one phase of the economic cycle to another are related to the movement of capitalist production and that, through the 4 phases, keep a succession relationship with each other: crisis, depression, revival and boom. Each crisis is where a capitalist cycle ends and another cycle begins again. Then, in depression or recession is when there is negative economic growth for two consecutive quarters. The third phase is the recovery or reactivation, after the floor has been touched in the previous phase. The last boom or bust phase is when economic activity is in a period of prosperity or peak. When production stagnates, the crisis will come again and a new economic cycle will begin.