There are exogenous and endogenous reasons for business cycles.

Exogenous reasons are reasons that originate outside the economy of the country and cannot be predicted or avoided and can cause economic activities to increase or decrease. These include for example:

• Climate changes such as droughts and floods.
• Economic shocks such as increases in the price of essential imported products such as fuel.
• Epidemics such as Ebola that spread from abroad.
• Political changes in neighbouring countries that cause refugees to stream to a country.

Endogenous reasons are events that take place within the country and can cause economic activities to increase or decrease. These include for example:

• Changes in injections and withdrawals of money in the economy. If more money is withdrawn than injected, economic activities will decrease and vice versa.
• Business confidence. If the members of the economy have confidence in the economy, economic activities will increase and vice versa.
• Political changes can promote or restrict economic activities.
• The role of the government. If the government creates a favourable climate for business activities, it will cause economic activities to increase and vice versa.
• The structure of the economy can change, for example, more digital resources can be used, which can cause economic activities to increase.