Business Cycles & the Economic Cycle

No economy grows in a straight line — output rises through expansion, tops out at a peak, contracts through recession, and bottoms out at a trough before the next expansion begins. This simulation models GDP as an output-gap oscillator riding on a long-run growth trend, with unemployment and inflation reacting through Okun's law and the Phillips curve. Adjust cycle volatility, length and stabilization policy, or fire off a recession or boom shock, to see how the four phases play out and how counter-cyclical policy shrinks the swings.