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Introduction
In general the economy tends to experience different trends. These trends can be grouped as the business/trade cycle and may contain a boom, recession, depression and recovery. A business/trade cycle (see figure 1) is the periodic but irregular up-and-down movements in economic activity, measured by fluctuations in real Gross Domestic Product (GDP) and other macroeconomic variables. Samuelson and Nordhaus (1998), defined it as ‘a swing in total national input, income and employment, usually lasting for a period of 2 to 10 years, marked by widespread expansion or contraction in most sectors of the economy’. These fluctuations in economic activity usually have implications on employment, consumption, business confidence, investment and output.


Theories and the nature and causes of business cycle fluctuations

The Keynesian Approach
This theory shows how the collaboration of multiplier and accelerator can lead to regular cycles in aggregate demand. The......

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Approximate Word Count: 1645
Approximate Pages: 7 (250 words per double-spaced page)

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