The paper presents a simple, systematic and novel graphical method which uses computer graphics for prediction of limit cycles in two dimensional multivariable nonlinear system having rectangular hysteresis and backlash type nonlinearities. It also explores the avoidance of such self-sustained oscillations by determining the stability boundary of the system. The stability boundary is obtained using simple Routh Hurwitz criterion and the incremental input describing function, developed from harmonic balance concept. This may be useful in interconnected power system which utilizes governor control. If the avoidance of limit cycle or a safer operating zone is not possible, the quenching of such oscillations may be done by using the signal stabilization technique which is also described. The synchronization boundary is laid down in the forcing signal amplitudes plane using digital simulation. Results of digital simulations illustrate accuracy of the method for 2×2 systems.