Macroeconomic Objectives and Theory (Unit 4 Topic 1)
The Business Cycle :: interactive model
How to use the Business Cycle Interactive
The Business Cycle Explorer lets you explore economic expansion, peaks, contractions, and troughs in real time.
Getting started: Click anywhere on the curve to jump to a phase, or drag the red dot left and right along the line. As you move, watch the phase indicator change (Expansion → Peak → Contraction → Trough) and observe how inflation, unemployment, and real GDP shift at each stage.
Four tabs guide your learning:
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Analysis — See how inflation and unemployment behave in each phase, plus why real GDP moves the way it does.
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Policy response — Discover how governments and the central bank (RBA) react. Fiscal stimulus during contractions? Rate cuts at the trough? See it all here.
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Australian example — Real Australian business cycles from 1990–2020, including the GFC and Australia's record 28-year expansion.
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Test your knowledge — Eight quiz questions cement your understanding of cycles, policy, and gaps between actual and potential output.
Pro tip: The dashed trend line shows long-run growth.
The gap between the curve and trend line represents the output gap — positive (inflationary risk) or negative (recessionary risk).
Start by exploring; then quiz yourself to lock in the concepts.