Business cycle graphs: peaks, troughs, expansion, contraction and recessions around a long-run trend
Business Cycle graphs the business cycle: real GDP rising and falling over time around a dashed long-run trend, the economy’s growth path. Real GDP climbs through an expansion to a peak, falls through a contraction to a trough, then recovers and climbs again, and each phase can be named with an arrow to the wave: expansion, contraction, recession and recovery. Draw 1 to 4 cycles, even ones like the textbook wave or irregular ones of different heights and lengths like real data, around a rising or a flat trend, and shade the recessions from each peak to the trough after it.
Teachers use it for AP Macroeconomics questions on tests, worksheets and slides. The graph is schematic, as AP graphs are drawn, with Real GDP up the side, Time along the bottom and no numbers. Label the peaks, troughs and phases in words, letter them A, B, C… along the wave for a quiz, with the answer key listed beside the settings, or leave blank lines for students to fill in, and print it in color or black and white.
What you can set
- Six common setups: peak, trough, expansion and contraction; a quiz with a letter at each point; irregular cycles with recessions shaded; one cycle with every term; blank lines for students; and no labels
- The wave: 1 to 4 cycles, in halves, starting at a trough, rising, at a peak or falling, how big the swings are, how steeply the long-run trend rises (or flat), and how irregular the cycles are, with New shape for another irregular wave
- Peaks, troughs, expansion, contraction, recession, recovery and the trend line, each in your own words, a blank line for students or left off, or all of them at once
- Labels written as words or as letters A, B, C… along the wave for a quiz, with the answer key, and the phases named once or in every cycle
- Recessions shaded from each peak to the trough after it, and a dot at each peak and trough
- Color or black and white (the shading hatched), the chart and axis titles (or blank lines), arrows or other ends on the axes, and label size
Copying, printing and sharing
Copy the figure straight into a test, worksheet or slide, or download it as a PNG or SVG. Printing the page prints
just the figure. Share link copies the page’s address with your settings in it, so anyone who opens it sees this
exact figure, and presets save settings you use often in your browser. It’s free, with no sign-up.
Frequently asked questions
What are the phases of the business cycle?
An expansion, when real GDP rises; a peak, its highest point, where the expansion ends; a contraction, when real GDP falls; and a trough, its lowest point, where the contraction ends and the next expansion begins. One full cycle runs from one peak to the next. The graph starts with the peaks, trough, expansion and contraction labeled; under Labels, switch on Recession and Recovery to name those too.
What is the difference between a contraction and a recession?
A contraction is any fall in real GDP from a peak to a trough. A recession is a contraction deep and widespread enough to count: a common rule of thumb is two quarters in a row of falling real GDP, and in the United States the NBER dates recessions by a significant decline in activity across the economy. Many textbooks use the two words for the same phase, and call the early part of an expansion the recovery. Here Contraction and Recession are two names for the same fall, from a peak to the trough after it: Contraction points at it from above and Recession from below. Recovery points at the rise just after the trough and Expansion further up.
What does the trend line on a business cycle graph show?
The long-run trend is the economy’s growth in potential output, the real GDP it can produce at full employment, which rises over time as it gains workers, capital and better technology. Real GDP swings above the trend near a peak, where unemployment is low and prices tend to rise, and below it near a trough, where unemployment is high. The Trend slider sets how steeply the dashed line rises, or flat at zero, and Trend line under Labels names it Long-run trend or in your own words.
Why are real business cycles irregular?
Real cycles don’t repeat: each expansion and contraction lasts a different length of time, and some recessions are much deeper than others. The textbook wave is even, as the graph starts. Move the Irregularity slider to vary each swing’s height and length, and press New shape for another wave; a link to the page keeps the one you have.
How do I shade recessions on a business cycle graph?
Under Shading, tick Shade recessions, peak to trough, and a gray band runs from each peak down to the trough after it, as charts of real GDP often shade recessions. In black and white the bands are hatched. Pair it with Irregular cycles, recessions shaded under Common setups for a graph that looks like real data.
How do I make a worksheet or quiz where students label the business cycle?
Under Labels, choose Blank lines under Every label, and each peak, trough and phase gets a line for students to write on; tick A dot at each peak and trough under Shading to mark the points. For a quiz, set Written as to Letters A, B, C…, and the labels become letters along the wave from left to right, with the answer key listed under the Cycle settings. Tick Name the phases in every cycle to letter every rise and fall, not just one of each.
Econ Figures Business Cycle