Most business cycle theories fall into one of two categories. Some economists assert that economies have basic flaws which, for some reason, lead to cycles. Other economists insist that only some form of outside interference can cause swings from high to low unemployment. Unemployment and business failures are the most visible and characteristic signs of a recession .Those who accept the flawed economy theory usually insist that economies are far too large and complex to operate without a significant degree of government guidance and regulation. Those who hold the opposite view believe that economies are not inherently flawed and that there will be no business cycles as long as there is no outside interference from governments, banks, or other sources.
All economies undergo stress and shock from time to time.
Natural disasters, such as hurricanes, tornadoes, floods, and earthquakes, can do serious economic damage, but the damage tends to be localized. A more severe shock, such as the increases in oil prices during the 1970s, can have far-reaching consequences. But economies adjust to the new situation in a few years. Shifts, changes, and temporary fluctuations do not constitute business cycles. They are adjustments that economies have always endured.