Economic Cycle

The economic cycle is a cycle of growth ("boom") and recession ("bust") that occurs in capitalist economies. A healthy economic cycle has an upwards trend.

The cycle has a significant impact on unemployment and inflation. The former is low during booms and high during busts, and the latter is high during booms and low during busts.

Boom
A boom is when, as the name suggests, business is booming.
 * Unemployment is low
 * Confidence is high
 * Investment is high
 * Inflation is rising

Recession
A recession is a prolonged period of economic decline (it must be longer than six months to be classed as a recession).
 * Unemployment is rising
 * Confidence is falling
 * Investment is falling
 * Inflation is stagnating

Slump
A slump is the bottom "peak" of the cycle.
 * Unemployment is low
 * Confidence is low
 * Investment is low
 * Inflation is falling (possibly deflation)

Recovery
Recovery is the period when an economy is getting out of the slump and back into the boom.
 * Unemployment is falling
 * Confidence is rising
 * Investment is rising
 * Inflation is rising