What keeps a business cycle going?

The shifts that occur during a business cycle have many causes, some more predictable than others. Often, two or more factors will combine to push the economy into the next phase of the business cycle. Typically, a sharp rise or drop in some important economic variable will set off a series of events that bring about the next phase. Business cycles are affected by four main economic variables:

1. Business investment

2. Interest rates and credit

3. Consumer expectations

4. External shocks