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Trade cycle is a cyclical process. The trade cycle refers to the ups and down in the level of economic activity which extend over to a period of several years. The trade cycle come in the capitalistic economies. J.M. Keynes says, “A trade cycle is composed of periods of good trade characterized by rising prices and low unemployment percentage, with periods of bad trade characterized by following prices and high unemployment percentages.” This shows how economic growth can fluctuate within different phases, for example:

i) Prosperity or boom (which is high growth causing inflation)
ii) Peak (top of trade cycle)
iii) Downturn or Recession ( fall in economic growth)
iv) Recovery (upturn of economic growth)

A trade cycle is composed of periods of good trade a characterized by rising prices and low un-employment percentage. The average length of trade cycle is a little more over eight years. The course of a trade cycle is generally traced through its various phases. Each of the phases is characterized by different economic conditions. In each phase the business face the different situation and pas through different experience.

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