Question

Capitalism has a cyclical nature. What does this mean and what causes these cycles?

Answer 1

Answer:

There are many different factors that cause the economic cycle – such as interest rates, confidence, the credit cycle and the multiplier effect.

Causes of the business cycle

*Interest rates.

*Changes in house prices.

*Consumer and business confidence.

*Multiplier effect.

*Accelerator effect.

*Lending/finance cycle.