CFA Level I · CFA Level I Exam · Understanding Business Cycles
During which phase of the business cycle are economic activity, such as output and employment, most likely to be at their lowest level before beginning to rise?
The trough is the phase where economic activity is at its lowest. It marks the end of a contraction and the start of a recovery. A peak is the highest point, and an expansion is the period of rising activity after the trough.
- ATroughCorrect
- BPeak
- CExpansion
Explanation
The trough is the lowest point of economic activity, where a contraction ends and a recovery begins. The peak is the highest point before a contraction begins. Expansion is the phase of rising activity after the trough, not the lowest point.
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