Economic cycles refer to the fluctuations in economic activity that an economy experiences over time. These cycles typically consist of four phases: expansion, peak, contraction, and trough. During the expansion phase, economic activity increases, leading to higher employment and production. The peak represents the highest point of economic activity before a decline begins. In the contraction phase, economic activity slows down, resulting in reduced spending and increased unemployment. This phase continues until the economy reaches a trough, the lowest point of the cycle. After the trough, the economy can begin to recover, starting the cycle anew. Understanding these cycles helps policymakers and businesses make informed decisions.