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One confusing cycle that many people have an overwhelmingly hard time grasping is the business cycle in America This cycle is crucial to understand because of the role it plays in determining what state our economy is in People need to understand the business cycle if they want to have a more in depth understand of how our economy goes through its changes The business cycle although complex can be classified into four main areas that can help all people to understand it in a better sense The first area is the prosperity phase which is the most suitable stage for the country The second stage is the recession stage this stage is where our countrys economy begins to decline The third stage is labeled as the depression stage where our country will hit its lowest economic status called the trough The fourth and final stage is called the recovery stage meaning the countrys economy is beginning to see improvement Although there are four confusing stages they can be easily explained by breaking them down and examining each stageThe prosperity phase is a large piece in the business cycle Robert Ristau can sum up this phase as The phase where most people who want to work are employed and businesses produce goods and services in record numbers20 In this phase the economy is in excellent shape and many advantages are availableOne of the major advantages of this business phase is the high level of effective demand When demand is high it is ideal for a business to maximize its revenue and sell off much of its inventory at a quicker rate This means that many businesses will have the need for more employees giving their companies room to grow With more business growth the countrys gross national product increases giving the countrys economy a more positive report The GNP attributes earnings to the country where the company is owned not where the product is manufactured
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