ABSTRACT
This chapter deals with the reasons behind changes to macroeconomic variables. These developments result in alternating periods of higher and lower economic growth. Governments implement inflation-restricting policies because a wide-spread general rise in prices has some negative effects on the economic process. The chapter explores the theme of the interconnections between government and business cycles. Research institutes use certain models to predict developments in macro economic variables. In the Keynesian view of economics, the government is responsible for realising the objectives of economic policy and should be actively involved in the business cycle. The chapter explains the prediction tables widely used by governments and industry to base their policies on, and also deals with those parts of industry that are liable to suffer from a cyclical downturn and the policies they could implement to prevent negative effects.
