Although the term 'business cycle' implies that the economic fluctuations are regular and predictable ,they are not.
The more common are the recessions the more erratic they are. Sometime the one recession period is near the other. Sometime they abstain a lot.
The problem of economic fluctuations can be clear looking at figure 1.
The figure demonstrates the increase of the real GDP of the Greek economy for the period 1988-2008.
If the economy had a 3% growth rate, that growth rate would not be smooth. The growth rate oscillate at 3% per year(this is the trend) as the straight line shows, but there are significant fluctuations from the trend. The recession periods are periods where the production of commodities and services decrease and it is represented in the graph with the negative growth rate of GDP.
Concisely, we can say that the business cycle is the phenomenon of the recurrent fluctuations of the general economic activities that are observed in a period of time.
Discrimination of the business cycles
At one time, economists believed that the business cycle was regular with predictable duration, but nowadays we believe that the cycles is irregular with different frequency ,magnitude ,duration and different impacts on the economy.
According to their periodicity and intense, the business cycles can be separated into:
1) Long-term cycle or Kondradiev cycle.
The total duration is 50 years from which 20 years corresponds to the economic growth period ,then follows a 10 years stability period (at high levels) and in the last stage there are 20 years of recession.
2)Medium-term cycle or Juglar cycle.
This cycle consists of an average7 to 10 years and it is usually referred as 'the business cycle'.
3)Short-term cycle or Kitchin cycle.
It is known as the 'commercial cycle' and lasts 3-4 years.
Stages of the business cycle
Figure 2:The stages of the business cycle, Source: Wikipedia
Joseph Schumpeter( ) was the first economist who supports that the Juglar cycle has four stages.
Nowadays, all business cycles can be distinguished into four stages. The graph above is a diagrammatic representation of the business cycle.
The stages of the business cycle and their main characteristics are the following:
1)Growth or expansion :at the beginning of this stage there is excess demand for commodities and services. In order the economy to produce them ,the output production and the employment should increase. Then the unemployment rate decreases and at the same time the GDP and the national income increase. The rise in total demand and production cause profits and the profits motivate people and industries to invest. However, as the expansion continues it causes an increase in the general level of prices, and the the first inflationist tendencies are obvious.(责任编辑：BUG)