Dramatizes that full employment and a stable price level cannot be taken for granted

In fact, the economy develops by business cycles, i.e., periodic fluctuations in output, employment,

And price levels which are characteristic of any capitalist economic system; the long-term

Trend of economic growth is interrupted and complicated by both unemployment and inflation,

Although characterized by common phases — peak, recession, trough, recovery — business cycles

Vary greatly in duration and intensity.

The crises of 1929-1938, 1948-1949, 1957-1958, 1969-1970, 1974-1975, 1980-1982, 1990—

Were of world-wide importance. The crisis of the 1930s undermined the economic activity of

the US by the whole of ten years and not without reason was called “The Great Depression.”

Beginning with 2001, the decline in business activity (business recession) has been occurring in the

Majority of national economies of developed countries.

A) The phases of the cycle of economic development

Generally speaking, the term business cycle refers to the recurrent ups and downs in the level of

Economic activity which extend over a period of several years. Individual business cycles vary substantially

In duration and intensity. Yet all embody common phases which are variously labeled by

Different economists.

Trough

Time

Figure 16.1. The business cycle

Economists distinguish between four phases of the business cycle and recognize that the duration and