efnahagssveifla

Economic fluctuations, known as efnahagssveifla in Icelandic, refer to the periodic variations in economic activity that an economy experiences over time. These fluctuations typically include periods of expansion and contraction in economic output, employment, and income levels. The business cycle is a fundamental concept in economics that describes these patterns.

Economic fluctuations can be caused by various factors including changes in consumer confidence, monetary policy, fiscal policy, technological innovations, external shocks, and financial market conditions. These fluctuations can have significant impacts on businesses, individuals, and governments alike.

During periods of economic expansion, characterized by increasing GDP, rising employment, and improving business conditions, economies often experience growth and prosperity. Conversely, during economic contractions or recessions, economic activity slows, unemployment rises, and economic indicators decline.

Governments and central banks often implement policies to mitigate the negative effects of economic fluctuations, aiming to stabilize the economy and promote sustainable growth. Understanding and managing economic fluctuations remains a central challenge in macroeconomic policy.