Thesis: Phases of Business Cycle

Sample Thesis Paper

To summarize all that have been discussed previously it could be said that a business cycle is just like a roller coaster. Despite of the fact that business cycles differ in intensity and duration there are four phases of a business cycle which are peak, recession, trough and recovery. It starts with a peak then drop down to the bottom then again stats to climb and after that it reaches another peak. Although it’s very difficult to predict the current level of the economy it could be said that the economy operates in anyone of these phases. Through research economist have derived some indicators that helps in the forecasting of a recession but nothing can be said for sure (Tucker 2008).

Recession is the downturn in any economy during which real GDP declines the business profits falls, the potential output is not generated and majority of the workforce faces unemployment. Peak time of an economy is the time at which the real GDP reaches its maximum. Trough is the time just after the recession the real GDP in this time is on the lower side. And the last phase is of the recovery in which the real GDP again starts to regain its previous position, organizations again starts to generate profit and the unemployment level starts to move towards full employment. One thing that should be remembered is that real GDP means total value of the goods and services produced in an economy in which price changes as compared to the previous years are adjusted. Price adjustments include both inflation and deflation.

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