Business cycles
The intuitive explanation
The most common graphical representation of business cycles can be seen below. It is shown that business cycles concern instability in the real GDP growth. In some periods GDP grows faster and then its growth rate slows down or even becomes negative. The term "cycle" refers to the fact that these fast growth periods and slow downs tend to repeat. However, the length of these periods are very different as was seen on the previous page.
In the graph below it is possible intuitively follow the mechanism within economy which explain the cyclical development. Just go with the mouse to the different points on the line and find out what is going on in the economy when it is on that point.
Figure 2. Business cycles