Economic expansion
An economic expansion is an upturn in the level of economic activity and of the goods and services available. It is a finite period of growth, often measured by a rise in real GDP, that marks a reversal from a previous period, for example, while recovering from a recession.[1][2] The explanation of fluctuations in aggregate economic activity between expansions and contractions ("booms" and "busts" within the "business cycle") is one of the primary concerns of macroeconomics.[3]
Definition
[edit]According to the four stages of a business cycle (expansion, peak, contraction, trough), an expansion is an upward trend when a country's economy experiences relatively rapid growth as measured by a rise in industrial production, employment, consumer spending, and utilization of resources.[4][5] Whereas a recession is defined as two consecutive quarters of decline in GDP,[6] economic recovery and prosperity are two successive phases of expansion.
Economic expansion can be affected by external factors such as technological changes or weather conditions,[7] or by internal factors such as a country's fiscal policy,[8] monetary policy, regulatory policy,[9] interest rates, the availability of credit, or other impacts on producer incentives. Global events, such as pandemics, may also influence the amount of economic activity in various countries.[10][11]
Economic expansion and contraction refer to the overall output of all goods and services, while the terms "inflation" and "deflation" refer to rising and falling prices of commodities, goods and services in relation to the value of money.[4]
From a microeconomic standpoint, expansion usually means enlarging the scale of a single company or firm. This can be achieved through internal actions—opening branches, finding new customers, inventing products, developing lines of business—and through integration, for example, taking over or merging with other companies.[12]
References
[edit]- ^ "Economic Growth: What It Is and How It Is Measured". Investopedia. 5 June 2024.
- ^ Compare:Lederer, Emil (May 1939). "Is the Economic Frontier Closed?". Social Research. 6 (2). New York: 154–155. JSTOR 40981818.
I would define economic expansion as the increase of aggregate production from one production period to another. If the concept is defined in this general way it includes expansion that results from an increase in population, from better utilization [...].
- ^
Ryan, Cillian; Mullineux, Andrew W. (1997). "The ups and downs of modern business cycle theory". In Snowdon, Brian; Vane, Howard R.; Backhouse, Roger E. (eds.). Reflections on the Development of Modern Macroeconomics. Cheltenham: Edward Elgar Publishing. p. 136. ISBN 978-1781008492. Retrieved 22 May 2023.
[...] the primary focus of macroeconomics swung back from determining and manipulating the equilibrium level of output to the 'business cycle'.
- ^ a b "Economic Cycle: Definition and 4 Stages of the Business Cycle". Investopedia. 19 December 2023.
- ^ Bondarenko, Peter. "expansion". Britannica Money.
- ^ Claessens, Stijn; Kose, M. Ayhan (11 February 2019). "Recession: When Bad Times Prevail". International Monetary Fund.
- ^ Colacito, Riccardo; Phan, Toan; Sablik, Tim (August 2018). "The Impact of Higher Temperatures on Economic Growth". Federal Reserve Bank of Richmond.
- ^ Horton, Mark; El-Ganainy, Asmaa (28 June 2019). "Fiscal Policy: Taking and Giving Away". International Monetary Fund.
- ^ "Regulatory reform". Organization for Economic Co-operation and Development (OECD). Retrieved 25 January 2025.
- ^ "Overview: World Economic Situation and Prospects 2024". United Nations. 5 January 2024.
- ^ "Chapter 1. The economic impacts of the COVID-19 crisis". World Development Report (WDR). World Bank Group.
- ^ Rodrigo, G. Chris (15 June 2017). "Micro and Macro: The Economic Divide". International Monetary Fund.
External links
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