what causes an economic cycle 
the causes of an economic cycle are widely debated among different economic schools of thought monetarists for example link the economic cycle to the credit cycle here interest rates which intimately affect the price of debt influence consumer spending and economic activity on the other hand a keynesian approach suggests that the economic cycle is caused by volatility or investment demand which in turn affects spending and employment the bottom linethe economic or business cycle refers to the cyclical pattern experienced by the economy the economy remains in an expansion phase until it reaches its peak reversing to the downside and entering a contraction before a trough and begins to expand once again gdp interest rates employment levels and consumer spending can help define the economic cycle although there are different economic theories to explain what drives the economic cycle the conditions associated with each stage can impact business and investment decisions 