MACROECONOMIC THOUGHTS.PART 19

When we talk about the theory of business cycle,we refer to measures that provide graphical details of economic performances at a particular period.It indicates the volatility of economic performance and tracks perpetuality of business fluctuation.Business cycle generally speaking is divided into four phaseswith the first phasetrough,a point at which national output is at the lowest margin when compared to the potential level.Then the trough is followed closely by an expansion phase a period that measures risinglevel of national output.When the output reach or hits its highest point relative to potential level,the phase is called peak,while peak is also followed by recession.It is the phase at which national output falls absymally from peak to trough again and then overall economic performance using business cycle to measure and compare potential GDP to the actual GDP.Depression is a severe form of recession such as happened in the great depression of 1930s when in 1929 about 11,000banks out of 30
LEON WALRAS
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