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# Bank Economic Cycles

## Definition

The recurring patterns of expansion and contraction in banking activity and their effects on the broader economy. These cycles can significantly affect economic development and require careful management.

## Source Chapter

Book II, Chapter 2

## Context

Smith analyses how banking cycles affect the broader economy, showing how periods of credit expansion can lead to overtrading and subsequent contraction. He examines the mechanisms through which these cycles operate and their economic effects.

## Economic Domain

General Theory

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