The Four Phases Of A Business Cycle Business cycles are affected by the actions of businesses, consumers, and the government. In turn, businesses, consumers, and the government are affected by business cycles.Economists have indentified four phases that comprise the business cycle:1.Prosperity. It is a period of economic growth. Nationwide, there is a low employment, an increase in the output of goods and services, and high consumer spending. Sometimes this period is called peak prosperity. Consumers are most likely to buy their wants aside from their needs because they have more money to spend.2.Recession. It is a period of economic slowdown. Unemployment begins to rise, fewer goods and services are produced, and consumer spending decreases. Recessions can end relatively quickly or last for a long period of time. This period would be very difficult for services that offer high quality items but at high price also. For instance,Christian Louboutin, you run a digital printing shop and you are known for your high quality print postcards and outstanding customer service system, your sales will tend to get lower at this time, because people will look for cheaper items and quality is not their priority.3.Depression. It is a prolonged and deep recession. During a depression, consumer spending is very low,Christian Louboutin Sale, unemployment is very high, and production of goods and services is down significantly. Poverty results because so many people are out of work and cannot afford to buy food, clothing, or shelter. And some businesses may close because there are fewer customers to buy from their stores at this period.4.Recovery. It is a period of renewed economic growth following a recession or depression. Recovery is characterized by reduced unemployment, increased consumer spending, and moderate expansion by businesses. Periods of recovery differ in length and strength.Businesses tend to react to business cycles by expanding their operations during periods of prosperity or recovery and curtailing their operations during recessionary periods. Expansion may involve investments in new properties, equipment, and inventories as well as hiring more employees. When the economy moves into a recession,Christian Louboutin Sale, one of the first things businesses do is lay off workers.Understanding this business cycle will help you formulate strategies on what to do when these periods occur in your community.