It has frequently been observed that interest in business or trade cycle theory is itself cyclical (e.g. Zarnowitz 1985, p.524). In periods of sustained prosperity interest wanes, as it did in the 1960s and early 1970s when research into macroeconomic dynamics concentrated on growth theory. At the end of the 1960s, the continued existence of business cycles was questioned. The experiences of the 1970s and early 1980s, especially following the 1973 and 1979 oil price shocks, brought a resurgence of interest in business cycles.

There are a number of important questions about business cycles which remain to be answered conclusively. They include the following:

  • Are there long cycles coexisting with the business cycle? If there are, then the practice of treating business cycles as ‘growth cycles’ (i.e. fluctuations around a linear or log linear growth trend) will be misleading. This practice is also dubious if the trend itself is stochastic or nonlinear, as noted in section The Long Swing Hypothesis and the Growth Trend .

Economics is one of the oldest and most influential of intellectual disciplines. Practically all of the great thinkers, from Aristotle to Einstein, have tried their hand at it, and the great economists like Adam Smith, Thomas Malthus, David Ricardo, John Maynard Keynes and Milton Friedman rank among the most influential minds in our history.

It is already apparent from this brief overview that the subject of economics is a very broad one. Just as the study of the physical world is divided into fields such as physics and chemistry, economics is likewise divided into fields comprised of closely related topics.

Macroeconomics focuses on trying to understand events that affect the whole economy. In the fall of 2000 and continuing through the fall of 2001 there was the U.S. experienced a decline in sales, production, and employment that affected most firms and industries.

A few industries, notably housing construction, continued to do well. This kind of widespread decline in economic activity, when it lasts for more than six months, is called a recession.

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