Trade cycle-keynes and mitchell description, Managerial Economics

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Keynes and  Mitchell Description

According to Keynes description, a trade cycle is characterised by alternating expansionary and contractionary wavy movements in the aggregate business activity and there is some regularity in respect of the duration and time sequence of the upward and downward movement of a trade cycle. Furthermore, a trade cycle is characterised by the presence of crisis ,i.e., the peak and trough turning points are asymmetrical with the peak having pointed steep bends on either side while the trough has gently upwards slopping sides. In short, a trade cycle refers to the wavelike movements of the economy caused by outside impulses operating upon the economy.


According to burns and Mitchell, normal trade cycle consists of the four closely interrelated phases of revival, expansion, recession and contraction. The peak and trough represent the critical mark off points in the cycle. From this stand point the greater part of the cycle can be divided into the expansion phase which extends from trough to peak. In the neighbourhood of the peak and trough there are the upper and lower turning points of relatively short duration designated as revival and recession.


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