Use the following diagram to answer the next question.

The phases of the business cycle from points A to D are, respectively

Question

Use the following diagram to answer the next question.

The phases of the business cycle from points A to D are, respectively

BlackTom AI · Accepted Answer

To tackle this question, first identify what each labeled point represents in the business cycle diagram. A appears at a local maximum of the red cycle, indicating a peak in real GDP (Y). B is located on the downslope after that peak, which corresponds to a contracting phase, i.e., a recession. C sits at a low point on the cycle, representing the trough where real GDP is at a minimum. D is on the upswing moving toward higher output, signaling an expansion.

Option 1: peak, recession, trough, expansion. This sequence matches the order A (peak), B (recession), C (trough), D (expansion) exactly as interpreted from the diagram. The terms align with the standard cycle phases: peak = high point, recession = decline after the peak, trough = low point, expansion = recovery and growth.

Option 2: expansion, recession, trough, peak. This reverses the order starting from A, placing expansion first, which contradicts A being a peak and the subsequent downturn to recession.

Option 3: peak, recession, expansion, trough. Here after recession the third stage is labeled expansion, but the diagram shows D is moving upward toward growth while C is the actual trough; placing expansion before the trough disrupts the actual low point in real GDP.

Option 4: trough, recovery, expansion, peak. This starts with a trough at A, which is inconsistent with A being a peak locale; also it uses “recovery” in place of “recession” and ends with a peak, misordering the cycle stages shown by B, C, and D.

Overall, the option that faithfully tracks the labeled points A through D on the diagram is the one that lists peak first, followed by recession, then trough, and finally expansion, reflecting the visual progression of the cycle from A to D.

Use the following diagram to answer the next question. The phases of the business cycle from points A to D are, respectively

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