The main variables which decide the economic activities are known as macro economic variables.

Macro economic variables can be shown as follows

• National output
• Employment
• Price level
• Balance of payment
• Foreign exchange rate.

• When the activities of the main economic variables change, the aggregate production
  of the economy also changes.
• Business cycles are explained as the cyclical behaviour of real gross domestic
  production which changes with time.
• Business cycles can be used to understand the relationship of short term and long
  term behaviour of a macro economy.

Can understand the four periods of a business cycles.

• Recession
• Trough
• Expansion
• Peak

This can be illustrated with a graph.

• The point where the actual output is at its minimum, is trough; and maximum point of
  the actual output is peak.
• The period from trough to peak , is the period in which the actual production is expanded.
• The period from peak to trough is the periods in which the actual production is
  constructed; and this the recession.
• Time periods of expansion are longer than recession .
• Time from one peak to another peak is the length of a business cycle and these lengths
  vary in a business cycle and lengths vary with each other.
• The long term trend of a business cycle can be explained as either economic growth or
  economic decline.