The economic cycle is characterized by the fluctuations in economic activities and overall GDP growth. The GDP growth fluctuates with time and it does not growth at the uniform speed over a long period of time. The economic cycle phase is mainly determined by GDP, unemployment rate and industrial activity.
The main two phases of economic cycle are expansion where the GDP increases over a course of time and contraction where the GDP decreases over a course of time. The turning points between these two phases are called “Peak” where GDP growth touches the maximum value and “Trough” where GDP contracts the most. If the GDP contracts for two successive quarters, then technically it is called Recession.