Consider a society consisting of two people. charles earns an income of $85,000 per year and dina earns an income of $25,000 per year. the government is considering a redistribution plan that would impose a 25% tax on charles's income and give the revenue to dina. without any incentive distortion, charles would retain $63,750 and dina would end up with $46,250. however, let us assume that

The business cycle is the periodic but irregular up-and-down movement in economic activity, measured by fluctuations in real gross domestic product (gdp) and other macroeconomic variables. a business cycle is typically characterized by four phases—recession, recovery, growth, and decline—that repeat themselves over time. economists note, however, that complete business cycles vary in length. the duration of business cycles can be anywhere from about two to twelve years, with most cycles averaging six years in length. some business analysts use the business cycle model and terminology to study and explain fluctuations in business inventory and other individual elements of corporate operations. but the term "business cycle" is still primarily associated with larger (industry-wide, regional, national, or even international) business trends.