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As in the wider economy, players in the real estate sector tend to think in terms of cycles. In macroeconomics the discussion is of economic cycles, meaning the fluctuations in the degree of utilization of production potential. Economic theories investigate economic cycles and attempt to explain how the wavelike changes in the level of economic activity come about in a market economy. This refers not only to overall economic growth measured in terms of gross domestic product (GDP),but also to changes in employment levels, prices and in interest rates.
An economic cycle is typically divided into four phases:
– Expansion
– Boom
– Recession
– Depression
Source : UBS AG
