In the expansion phase of a typical business cycle, how does the economy move between key turning points?

Introduction / Context:
Macroeconomics describes the ups and downs of economic activity using the concept of a business cycle. The cycle includes phases such as expansion, peak, contraction, and trough. Understanding what happens in each phase is essential for interpreting economic indicators like GDP, unemployment, and inflation. This question focuses on the expansion phase and asks how the economy moves between major turning points during that period.

Given Data / Assumptions:
A business cycle has at least two key turning points: peaks and troughs.A trough represents the lowest point of economic activity in a cycle.A peak represents the highest point of economic activity before a slowdown or contraction.Expansion describes the period when output, employment, and income are rising from low levels toward higher levels.

Concept / Approach:
During expansion, the economy recovers from a trough. Production increases, businesses invest more, jobs are created, and consumer spending grows. This upward movement continues until the economy reaches a peak, where growth rates may start to slow and capacity constraints appear. At the peak, the level of activity is high, but the cycle is at risk of turning into a contraction. Therefore, expansion can be described as the movement from trough to peak, while contraction describes the movement from peak back down to trough.

Step-by-Step Solution:
First, recall the sequence of a typical business cycle: trough, expansion, peak, contraction, and back to trough.Next, focus on expansion and remember that it begins after the economy has hit a trough, when conditions are relatively weak.Then, recognize that during expansion, macroeconomic indicators such as GDP, employment, and income tend to improve.After that, note that this upward path continues until the economy reaches a peak, the high point before the next slowdown.Finally, see that option A, which describes movement from trough to peak, matches this definition, whereas options B, C, D, and E do not.

Verification / Alternative check:
Macroeconomics textbooks and diagrams of the business cycle illustrate the expansion phase as the rising portion of the curve between a trough and a peak. They explicitly label the downward portion from peak to trough as contraction or recession. There is no standard model where expansion moves from peak to trough or where the economy remains flat during an expansion. This confirms that option A is the correct description.

Why Other Options Are Wrong:
Option B describes contraction, not expansion. Option C suggests a direct move from trough into long term contraction, which contradicts the definition of expansion. Option D implies the economy jumps from peak to peak with no fluctuations, which is unrealistic. Option E states that the economy remains perfectly flat, which does not match the idea of an expansion phase involving rising activity.

Common Pitfalls:
Students sometimes confuse the names of phases or focus only on the level of GDP rather than the direction of change. Another pitfall is assuming that expansions last forever or that they are always smooth, when in reality they can include mini slowdowns or external shocks. Keeping the simple mental image of a wave moving upward from trough to peak during expansion helps keep the terminology straight and supports more accurate analysis of economic news and policy discussions.

Final Answer:
The correct answer is: The economy moves from a trough, where activity is at a low point, up to a peak, where activity reaches a high point.