Final answer:
A cyclical economy goes through repeated periods of expansion and contraction, while a traditional linear economy experiences steady growth. The business cycle is an example of a cyclical economy, with its four phases: expansion, peak, contraction, and trough.
Step-by-step explanation:
A cyclical economy is one in which economic activity goes through repeated periods of expansion and contraction. It is characterized by alternating phases of booms and recessions. In a cyclical economy, there is a constant ebb and flow of economic activity, with periods of growth followed by periods of decline.
This is different from a traditional linear economy, which is characterized by steady and continuous economic growth. In a linear economy, there are no significant fluctuations or cycles in economic activity. Instead, the economy grows at a relatively steady rate over time.
One example of a cyclical economy is the business cycle. The business cycle consists of four phases: expansion, peak, contraction, and trough. During the expansion phase, the economy is growing, and there is an increase in economic activity. This is followed by the peak phase, where the economy reaches its highest point of activity. The contraction phase then begins, and there is a decline in economic activity. Finally, the economy reaches the trough phase, where it is at its lowest point of activity before starting the cycle again.