Final answer:
The business cycle varies in amplitude and duration, consisting of four phases: expansion, peak, contraction, and trough. It reflects economic fluctuations around a long-term growth trend, and these fluctuations are unpredictable in nature.
Step-by-step explanation:
The business cycle has many ups and downs. These vary in amplitude and duration, meaning the extent of economic expansion or contraction and the length of time the phase lasts. The importance of a business cycle is significant since it represents short-term fluctuations in economic activity around a long-term growth trend.
There are four phases to the business cycle, including expansion, peak, contraction (recession or depression), and trough. Economic cycles do not follow a predictable pattern, which makes forecasting challenges, yet understanding where the economy is in the cycle can help economists make projections about future performance. Recessionary periods are marked by declines in GDP and general economic downturns, while expansion phases are characterized by periods of economic growth.