What does the business cycle represent?

The business cycle represents fluctuations in economic activity, specifically the alternating phases of expansion and contraction within an economy. During an expansion, economic indicators such as GDP, employment, and production are on the rise, indicating growth and prosperity. Conversely, during a contraction, these indicators decline, leading to slower economic activity, which may result in recession.

This cyclical nature is essential for understanding how economies operate over time, as they experience periods of growth followed by downturns. Recognizing these fluctuations helps policymakers, businesses, and investors make informed decisions. The other options provided focus on aspects that do not capture the overall pattern of economic activity; for instance, long-term growth refers to sustained development rather than cyclical behavior, daily stock price movements don't reflect broader economic trends, and currency stability concerns relate to exchange rates rather than the economic cycle itself.