Economic Cycle

Definition: Alternating periods of growth and contraction.

Example: The economy (usually defined by Gross Domestic Product (GDP), which is the value of what a country produces) tends to fluctuate between periods of growth (growing GDP) and recession (falling GDP).

Why It’s Important: It’s difficult to know what will happen next with the economy so you want a primary plan based on one forecast for the economy but at least one contingency plan if the economy moves in a different direction.

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