By the end of the 19th century, however, many economists had begun to recognize that economies were cyclical by their very nature, and studies increasingly turned to determining which factors were primarily responsible for shaping the direction and disposition of national, regional, and industry-specific economies.
Some business analysts use the business cycle model and terminology to study and explain fluctuations in business inventory and other individual elements of corporate operations.
But the term "business cycle" is still primarily associated with larger (industry-wide, regional, national, or even international) business trends.
Economic growth is in essence a period of sustained expansion.
Hallmarks of this part of the business cycle include increased consumer confidence, which translates into higher levels of business activity.
As a result, changes in sales result in magnified percentage changes in investment expenditures.
This accelerates the pace of economic expansion, which generates greater income in the economy, leading to further increases in sales.
Variations in investment spending is one of the important factors in business cycles.
Investment spending is considered the most volatile component of the aggregate or total demand (it varies much more from year to year than the largest component of the aggregate demand, the consumption spending), and empirical studies by economists have revealed that the volatility of the investment component is an important factor in explaining business cycles in the United States.
A particularly severe recession is known as a depression.
Also known as an upturn, the recovery stage of the business cycle is the point at which the economy "troughs" out and starts working its way up to better financial footing.
In general, if an increase in sales is expanding, investment spending rises, and if an increase in sales has peaked and is beginning to slow, investment spending falls.