Expansion
Also called: Upswing · Topic: Economic Growth Theories and Business Cycles · NCERT: Beyond NCERT
Meaning
Expansion is the rising phase of the business cycle. The business cycle is the recurring but irregular rise and fall of economic activity around its long-run trend. During expansion, output, jobs, incomes and prices all go up. The expansion builds into a boom and ends at the peak. If demand runs ahead of capacity during this phase, the economy can overheat.
Example
India's GDP grew by an average of 7.8% a year in 2002-07 and 8.2% in 2007-12 (Class 11, Table 3.1). Output, incomes and investment were all rising strongly in this long phase of expansion.
Don't confuse with
- Recovery: recovery is the rise that comes right after a trough, as the economy climbs back towards its earlier level. Expansion is the broader upswing that carries activity towards a boom and a peak.
Related concepts
- Business cycle
- Overheating
- Goldilocks economy
- Peak
- Trough
- Recovery
- Soft landing
- Economic slowdown
- Growth recession
- Recession