2)Peak :At the maximum point of the cycle the production and employment are in a really high level .Its the highest point between the end of the growth and the beginning of the recession. The economy reaches the full employment level and overconsumption is also observed. The GDP, the most important macroeconomic indicator is at the maximum point. However the prices become higher and higher and we can also perceive high inflation levels.
3)Recession or contraction: Recession is the period where the economy is shrinking. The characteristics of recession are the opposite from growth. In this stage there is a decline in the aggregate demand and a general slowdown in economic activity which lead the production to decrease. The GDP, the employment ,the inflation , the incomes fall during this period and in that pessimistic and uncertain environment there are no investment opportunities. If this stage lasts long and the prices continues to fall then deflation can appear.(deflation occurs when the prices are actually dropping-not disinflation)
4)Though: The though poses the end of the recession. The production is in its lowest level and the unemployment level is really high. Moreover the demand for goods is insufficient as the income level is really low and the inflation is high. The general enterprising climate discourages the investments and the majority of people and companies wait for the 'event' that will end this stage.
Causes of business cycle
Many economists can agree that an ideal level for the economy is that of full employment(For James Tobin that means 0% level of unemployment, for William Beveridge that means 3% whereas for many other popular economists like John Maynard Keynes it fluctuates between 3%-10%). At this level all people who are able and are willing to work can find a job at the prevailing wage and unemployed workers can find work instantly. The inflation level is constant and all the inputs the economy can use, are producing outputs. The full employment level will rise when the population increases and when new technological developments are found. If nothing else disturbs the economy there is no reason why the economy come out from the full employment level.
However, business cycles occur because disruptions to the economy shove the economy above or below the full employment level.
The causes of the business cycles are distinguished between endogenous and exogenous.
As endogenous reasons we can consider some variables which are determined out of the economic system like wars and revolutions, elections, changes in the price of oil, immigration, scientific developments, technological advances, financial bubbles.
As endogenous reasons we mean the variables that are determined inside the economic system and they cause by themselves the business cycles. Some of them are:(责任编辑：BUG)