A complete business cycle is described, in appropriate order, by which of the following sequences?

Question

BlackTom AI · Accepted Answer

Let’s break down what a complete business cycle typically includes and in what order the phases occur.
Option 1: 'peak, expansion, trough, contraction' starts with a peak, then jumps to expansion, followed by trough and contraction. This sequence misplaces the transition from expansion to contraction, since the normal order moves from expansion to contraction after the peak, not after an expansion has already occurred. The labeling here also suggests an atypical swap of expansion and contraction locations.
Option 2: 'peak, trough, contraction, expansion' begins with a peak, then a trough, then contraction, and finally expansion. This order is inconsistent because contraction generally leads to troughs before an expansion phase begins; placing a trough before a contraction step and then an expansion disrupts the standard progression from peak through a slowdown to a bottom before growth resumes.
Option 3: 'expansion, contraction, trough, peak' presents expansion first, followed by contraction, then trough, and ends at a peak. In economic terms, a trough occurs before the peak of the next cycle, and expansion follows the trough, not preceding it. This arrangement reverses the natural sequence of contraction into a bottoming trough and subsequent upturn toward a peak.
Option 4: 'peak, contraction, trough, expansion' aligns with the conventional model: the economy moves from a peak (high point) into a contraction (decline), deepens into a trough (low point), and then progresses into expansion (recovery and growth) heading toward the next peak. This ordering mirrors the standard business cycle progression from peak to trough and then to expansion.
In summary, options 1, 2, and 3 misorder the phases of the cycle, either by exchanging expansion/contraction positions or by placing troughs and peaks out of their typical sequence, while option 4 correctly sequences the cycle from peak to contraction to trough to expansion, reflecting the conventional interpretation of a complete business cycle.

ECON 2002.01 AU2025 (21333) Midterm Exam 2- Requires Respondus LockDown Browser

A complete business cycle is described, in appropriate order, by which of the following sequences?

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ECON 2002.01 AU2025 (21333) Midterm Exam 2- Requires Respondus LockDown Browser

A complete business cycle is described, in appropriate order, by which of the following sequences?

View Explanation

Log in for full answers

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