Basic Concepts of business cycles include terminology and measurement frameworks. Business cycle: Recurring fluctuations in aggregate economic activity (GDP, employment, prices). Recession: Period of negative GDP growth (contraction phase); conventionally two consecutive quarters of negative growth. Expansion: Period of positive growth (recovery/boom phase); increasing output and employment. Trough: Lowest point of cycle; unemployment peaks, confidence minimum; turning point toward recovery. Peak: Highest point of cycle; output maximum, inflation potential highest; turning point toward contraction. Amplitude: Size of fluctuation; measured as percentage deviation from trend. Duration: Length of phases; expansions typically longer in post-war period. Synchronization: Extent to which different sectors move together; most are procyclical. Trend: Long-term growth rate (removed from data to see cycles); output = trend + cycle. Potential output: Maximum sustainable output at full employment; recession when actual falls below. Output gap: Difference between actual and potential output; negative gap in recession. Inflation: Price level changes; often procyclical (accelerates late expansion, falls in recession). Unemployment gap: Difference between actual and natural unemployment rate. National Bureau of Economic Research (NBER): Official cycle dating agency in US; similar bodies in other countries. ICAI focus: Cycle terminology, measurement, trend vs. cycle distinction. Exam tip: Recession is technical (negative growth), not just decline from peak; understand difference between trend and cycle.