What does the business cycle illustrate?

The business cycle illustrates the fluctuations in economic activity over time, capturing the ebb and flow of economic expansions and contractions. This cycle typically includes stages such as expansion, peak, contraction, and trough, reflecting how an economy can grow and decline in response to various factors like consumer demand, investment levels, and government policies. It serves as a critical framework for understanding how economies operate over different periods, indicating periods of growth and recession.

This concept contrasts with the other options, which focus on separate aspects of economic activity. Seasonal changes in market demand relate to specific times of the year rather than long-term trends, while the growth rate of a country’s economy is a measure of its output over time but does not necessarily encompass the cyclical nature of that growth. Lastly, levels of employment in a given industry look at a microeconomic aspect rather than capturing the macroeconomic fluctuations represented by the business cycle.