Economic expansion

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An economic expansion is an increase in the level of economic activity, and of the goods and services available. It is a period of economic growth as measured (for example) by a rise in real GDP.[1][failed verification][2] The explanation of fluctuations in aggregate economic activity between economic expansions and contractions ("booms" and "busts" within the "business cycle") is one of the primary concerns of macroeconomics.{[3]

Typically an economic expansion is marked by an upturn in production and in utilization of resources. Economic recovery and prosperity are two successive phases of expansion, whereas a recession is defined as two declining periods of GDP. Expansion may be caused by factors external to the economy, such as weather conditions or technical change, or by factors internal to the economy, such as fiscal policies, monetary policies, the availability of credit, interest rates, regulatory policies or other impacts on producer incentives. Global conditions may influence the levels of economic activity in various countries.[citation needed]

Economic contraction and expansion relate to the overall output of all goods and services, while the terms "inflation" and "deflation" refer to increasing and decreasing prices of commodities, goods and services in relation to the value of money.[citation needed]

On the microeconomic level, expansion may involve enlarging the scale of a company. The ways of expansion include internal expansion and integration. Internal expansion means a company enlarges its scale through opening branches, inventing new products, or developing new businesses. Integration means a company enlarges its scale through taking over or merging with other companies.[citation needed]


  1. ^ O'Sullivan, Arthur; Steven M. Sheffrin (2003). Economics. Upper Saddle River, New Jersey 07458: Savvas Learning Company. p. 310. ISBN 0-13-063085-3.{{cite book}}: CS1 maint: location (link)
  2. ^ Compare: Social Research. New York: Graduate Faculty of Political and Social Science, New School for Social Research. 6: 154. 1939. I would define economic expansion as the increase of aggregate production from one production period to another. If the concept is defined in this general way it includes expansion that results from an increase in population [...]. {{cite journal}}: Missing or empty |title= (help)
  3. ^ Ryan, Cillian; Mullineux, Andrew W. (1 January 1997). "The ups and downs of modern business cycle theory". In Snowdon, Brian; Vane, Howard R. (eds.). Reflections on the Development of Modern Macroeconomics. Cheltenham: Edward Elgar Publishing. p. 136. ISBN 9781781008492. Retrieved 22 May 2023. [...] the primary focus of macroeconomics swung back from determining and manipulating the equilibrium level of output to the 'business cycle'.

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