In Chapter 19 we developed an account of the process whereby, over the long run, the capacity of the economy to produce output grows. In this chapter we consider why, as a matter of observation, the growth path followed by the economy involves fluctuations in the extent to which, in any given year, the available capacity is utilised. The problem of economic fluctuations is often discussed under the heading of the theory of economic cycles. What then is a cycle?
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