What does the international business cycle refer to?

The international business cycle refers to the variations in the level of economic activity in the global economy over time. This concept involves analyzing the expansion and contraction phases of economies around the world, as they can be interconnected and influenced by numerous factors, including trade relationships, global financial markets, and policy decisions.

When one country experiences economic growth or recession, it can have a ripple effect on others, due to aspects such as trade linkages or investment flows. By observing these fluctuations on a global scale, economists can identify patterns and assess the overall health of international economies, contributing to better forecasts and policy responses.

In contrast, other options focus on more specific elements like exchange rate fluctuations, seasonal trade trends, or interest rate stability, which do not encompass the broad and cyclical nature of economic activity across nations in the same way that the international business cycle does.