Business cycles are short-run fluctuations in aggregate economic activity around its long-run growth path. They consist of peaks, contractions or recessions, troughs, and recoveries and expansions. Key macroeconomic variables like production, consumption, investment, employment, money supply, stock prices, and interest rates behave differently in the business cycle, either moving pro-cyclically, counter-cyclically, or with no clear pattern. The interaction between the multiplier and accelerator effects shape the overall business cycle as initial changes trigger further rounds of spending.

11. variable Direction timing production Industrial production Pro-cyclical coincident expenditure Consumption Pro-cyclical coincident Business investment Pro-cyclical coincident Residential investment Pro-cyclical leading Inventory Investment Pro-cyclical leading Government purchases Pro-cyclical

12. Labour market direction timing Employment Pro-cyclical Coincident Unemployment Countercyclical unclassified Average labor productivity Pro-cyclical leading Real wages Pro-cyclical (mildly) Money market Money supply Pro-cyclical leading inflation Pro-cyclical lagging Financial variables Stock Pro-cyclical leading Interest rates Pro-cyclical lagging Real interest acyclical