What do fluctuations in the business cycle typically include?

Fluctuations in the business cycle primarily encompass periods of expansion and contraction within an economy. The business cycle reflects the economic activity levels, characterized by the expansion phase, where the economy grows due to increased consumer demand and investment, followed by a contraction phase, where economic activity declines. During expansion, businesses typically experience greater profits, lower unemployment rates, and rising consumer spending, while in contraction, unemployment may rise, spending decreases, and businesses often face reduced revenues.

The movement between these phases is a natural part of the economy's ebb and flow influenced by various factors such as interest rates, consumer confidence, and external economic conditions. Therefore, the correct response accurately captures the core concept of the business cycle, highlighting the essential dynamics that characterize economic fluctuations. Other options touch on economic aspects but do not directly address the cyclical nature of business activity as defined by expansions and contractions.