The five phases of the economic cycle are:

1. Expansion: During this phase, economic factors such as employment, output, wages, profits, and demand increase. Borrowing costs tend to rise as demand for loans grows. Investment activity increases, leading to the efficient utilization of idle funds.
2. Peak: This is the phase where the growth rate reaches its maximum limit. Economic factors such as sales, income, and employment stabilize, but the increase in prices leads to a reduction in consumer demand for goods like durables.
3. Recession: A decline in economic activity characterizes this phase. Output, investment, and prices fall. Supply exceeds demand as producers are often slow to react to the decreasing demand, leading to economic contraction.
4. Trough: In this phase, the economy experiences a significant decline below the normal level of activity. Economic output is low, and there is widespread unemployment. This phase represents the lowest point in the business cycle.
5. Recovery: The economy starts to recover from its lowest point. Demand picks up, leading to an increase in production, employment, and investment. The positive momentum eventually leads to steady growth, marking the end of the cycle.