In the context of the business cycle, a very low trough is indicative of which economic situation?

Introduction / Context:
The business cycle describes the natural rise and fall of economic activity over time, typically including expansion, peak, recession, trough, and recovery phases. This question focuses on the meaning of a particularly low trough and what it indicates about the severity of economic conditions.

Given Data / Assumptions:

• A trough is the lowest point in the business cycle after a period of decline.
• A low trough suggests that economic activity has fallen very far below normal trend levels.
• Terms like recession and depression describe different degrees of economic downturn.

Concept / Approach:
A recession is a significant decline in economic activity that lasts for a moderate period, typically measured by falling GDP and rising unemployment. A depression is a far more severe and prolonged downturn with very deep drops in output and employment. A trough marks the bottom of the downturn before recovery begins. When that trough is very low, it points to a particularly severe contraction in output and employment, which corresponds more closely to a depression than to an ordinary recession.

Step-by-Step Solution:
Step 1: Recall that a trough is the lowest point of economic activity in a cycle.Step 2: Recognise that a low trough signals very severe decline compared with normal fluctuations.Step 3: Understand that a depression is deeper and more serious than a typical recession.Step 4: Compare the options and note that option C explicitly refers to a serious depression.Step 5: Select option C as the correct interpretation of a very low trough.

Verification / Alternative check:
Economic discussions often use the depth of the downturn and the length of time at the bottom as indicators of depression like conditions. A gentle trough would match a mild recession, whereas a sharp, deep trough points to severe distress. This supports the idea that a low trough is associated with a serious depression rather than the start or end of a mild downturn.

Why Other Options Are Wrong:
Option A, the start of a depression, would normally occur earlier in the decline, not at the lowest point itself. Option B, the end of a recession, corresponds to the turning point upwards, but the qualifier low trough emphasises the severity rather than the timing of recovery. Option D, a growing recession, describes a phase before the trough, when output is still falling.

Common Pitfalls:
Students sometimes confuse the timing of peaks and troughs with the severity of downturns. Another issue is treating recession and depression as interchangeable terms. Remembering that the trough is the bottom and that depth indicates severity helps answer business cycle questions more accurately.

Final Answer:
a serious depression