Prosperity and Depression.pdf

CHAPTER 9DEFINITION AND MEASUREMENTOF THE BUSINESS CYCLE§ I'. INTRODUCTIONThere is complete unanimity among economistsII Crisis" that the problem of the recurrence of periods ofand economic depression and the cognate problem ofttDepression". acute economic or financial crises cannot fruitfullyQe discussed in isolation from the major problemof which they form part~viz., the problem of the busip.ess ortrade cycle ; by which is meant, a wavelike movement affectingthe economic system as a whole. It is therefore with the majorproblem that this study is, concerned.To define cc depression ", we must also define "prosperity" :for the two are correlated', concepts> since each is the negative ofthe other.Before we try, however, to define more precisely these' two 'cO(lcepts, it may be well to say a word about the meaning of thetwo related. terms "crisis" and," depression ". 'They are frequentlyused indiscriminately. Throughout this paper, they willbe sharply distinguished." Depression." will be used to mean a process or a continuousstate of affairs of more or less extensive duration, which will bedescribed. and defined in following sections of this, chapter.The term" crisis" has two meanings. In the technical senseof business cycle theory, it, means the turning-point which marks