Question

This is a graph of the business cycle.

A graph of the business cycle has time on the x-axis. A curve increases slightly and then decreases significantly to the lowest point on the graph. The curve then increases again.

Time is measured along the x-axis. What is measured along the y-axis?

Answer 1

Economic activity — typically aggregate output such as real GDP (or a related measure like industrial production, income, or output as a percent deviation from trend).