The Bust & Boom Economic Cycle! Basic Explanation! Short Article! (#88)

The Bust & Boom Economic Cycle: Basic Explanation

Our economy constantly moves through ups and downs — often referred to as the Bust and Boom economic cycle.

What Is a Bust?

Bust is when an economy shrinks and share prices tend to fall — the share market turns bearish. Investors lose money, job opportunities shrink, unemployment rises, and the economy overall is in a weakened state.

What Is a Boom?

Boom is the complete opposite: the economy grows, share prices rise, and the market turns bullish (a "bull run"). Investors earn profits from rising prices and tend to invest more, job opportunities expand, unemployment falls, and the economy is functioning well overall.

→ Related: What Are Bear 🐻 and Bull 🐂 Markets?(#42)

That's the basic Bust and Boom cycle — the economy's natural ebb and flow between contraction and growth. Thanks for reading.

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