List and discu ISS three key facts about economic fluctuations.

Economic fluctuations, also known as business cycles, refer to the periodic rises and falls in economic activity. These fluctuations can be observed in various macroeconomic indicators such as GDP, employment, and inflation. Here are three key facts about economic fluctuations:<br /><br />1. **Phases of the Business Cycle**: The business cycle consists of four main phases: expansion, peak, contraction (or recession), and trough. During the expansion phase, economic activity increases, leading to higher output, employment, and income levels. This phase is often characterized by rising GDP and decreasing unemployment rates. The peak represents the height of economic activity before a downturn begins. In the contraction phase, economic activity declines, resulting in lower output, employment, and income levels. This phase is marked by falling GDP and rising unemployment rates. The trough is the lowest point of the cycle, after which the economy begins to recover and enter a new expansion phase.<br /><br />2. **Causes of Economic Fluctuations**: Economic fluctuations can be caused by various factors, including changes in aggregate demand, supply shocks, and policy interventions. Aggregate demand fluctuations occur when there are changes in the overall demand for goods and services in an economy. These changes can be driven by factors such as consumer confidence, investment spending, government spending, and net exports. Supply shocks, on the other hand, refer to unexpected events that disrupt the supply of goods and services, leading to changes in prices and output. Examples of supply shocks include natural disasters, technological changes, and geopolitical events. Policy interventions, such as monetary policy actions by central banks and fiscal policy measures by governments, can also influence economic fluctuations by affecting aggregate demand and supply.<br /><br />3. **Impact on Individuals and Businesses**: Economic fluctuations have significant impacts on individuals and businesses. During periods of economic expansion, individuals and businesses may experience higher incomes, job opportunities, and investment prospects. This can lead to increased consumer spending, business investment, and overall economic growth. However, during periods of economic contraction or recession, individuals and businesses may face job losses, reduced incomes, and decreased investment opportunities. These adverse effects can lead to lower consumer spending, reduced business investment, and overall economic stagnation. Understanding the phases and causes of economic fluctuations is crucial for individuals, businesses, and policymakers to make informed decisions and mitigate the adverse effects of economic downturns.