Meaning:

The term “trade cycle,” also known as the business cycle or economic cycle, refers to the recurrent fluctuations in economic activity that occur over time in a market economy. These fluctuations typically involve changes in levels of production, employment, investment, and consumption, among other economic variables. The causes of trade cycle is characterized by alternating periods of expansion (growth) and contraction (recession) in economic activity.

Causes of Business Cycle:

A business cycle is a complex phenomenon which embraces the entire economic system it enlists of following internal and external causing business cycles.

Internal causes:

The internal causes are refers to the mechanism with the economic system itself which give rise to self generating and perpetuating business cycle such internal factors are;

• Changes in money supply or bank credit: Hawtrey regard business cycles are a purely monitory phenomenon .professor haw trey firmly assets that the causes of cyclical fraction are to be found only in those factor that produces expansion and contraction in the flow of money supply.
• Over investment: According to professor Hayek, monitory over investment in the capital good sector supported by the over expansion of bank credit may eventually lead to depression in the economy  while many other economy have attributed over investment in capital good as a major cause of business cycles.
• Under consumption or over saving: According to economist like Malthus and Hobson, the root cause of a trade cycle is over saving or under consumption. Which is due to the existing unequal distribution of wealth in the community? Hobson states that the induce exercise of the habit of saving would not enrich the community but would impoverish it because such large amount of saving give rise to greater value of capital formation which in turn  producers larger quantities of consumption of goods but in view of the increasing inequality of income and rising saving the amount of consumption taking place in the economy not be sufficient to lift all the goods brought to the market and  a decline section cannot lost long because of the limitation of the community power of consumption of any qualities of income.
• Business psychology: The business community generally over sensitive so there are waves of business optimism and pessimism. According to the psychological errors of optimism and pessimism give rise to a trend of business fluctuation in a pervasive manner. Business optimism and pessimism are interactive forces for once the business community realizes that it has made an error of optimism it then tries to correct it by committing errors of pessimism.
• Innovations:  J.A Schumpeter regards innovation as the originating causes of trade cycle that term innovation should not be confused with the inventions. Inventions are discoveries scientific novelties. Innovation is the application of such invention to actual production it is innovation that are subjected to cyclical fluctuation not inventions. Schumpeter classified innovation into 5 categories as follow:
• Introduction of new types of goods
• Introduction of new methods of production
• Opening of new markets
• Discovery of new source of raw materials
• Changes in the organization of industry like the creation of a Monopoly trust or curtain breaking up of monopoly cartel etc.
• Changes in the marginal efficiency of capital: according to Keynes a business cycle operates due to the fluctuation in the rate of changes in the marginal efficiency of capital. In his own trade cycle is best regarded as being occasioned by a cyclical change in the marginal efficiency of capital though complicated and often aggregated by associated changes in the other significant short period variables of the economic system.  

External causes:

External factors are the forces operating outside economic system in causing the business cycle such external forces on sun spots and weather conditions, wars revolutions, rates of growth of population, discoveries of new land and resources scientific breakthrough and technology advancement. Above all, elections and politics in modern Times or also causing business cycle professor Samuelson called them the political business cycle today economic life vibrates by and large with the rhythm of politics.

also read: explain the control of business cycle.