In the business cycle, a trough occurs at which point in the transition between decline and expansion of economic activity?

Introduction / Context:
The business cycle consists of recurring phases such as expansion, peak, recession, trough, and recovery. Understanding where the trough fits into this cycle is fundamental for economic and business environment questions. This item asks you to identify how the economy is transitioning at the trough.

Given Data / Assumptions:

• A recession or contraction is a period of declining economic activity.
• An expansion is a period of rising economic activity.
• A trough is defined as a turning point between these phases.

Concept / Approach:
A trough is the lowest point of the business cycle, marking the end of a period of decline and the beginning of a new expansion. Before the trough, output, employment, and investment have generally been falling. After the trough, these indicators start to stabilise and then rise. Therefore, a trough always represents a transition from decline or contraction to recovery and expansion, not the reverse.

Step-by-Step Solution:
Step 1: Recall that the sequence around a trough is recession, trough, then expansion.Step 2: Translate this into transitions: from decline to expansion at the trough.Step 3: Compare the answer choices and look for the statement that matches this transition.Step 4: Option A states that the economy is moving from decline to expansion, which matches the definition.Step 5: Select option A as the correct answer.

Verification / Alternative check:
Business cycle diagrams in economics textbooks consistently show that the trough is the point where the downward slope ends and the upward slope begins. It is the mirror image of the peak, where expansion turns into contraction. This confirms that the description in option A is correct.

Why Other Options Are Wrong:
Option B describes the transition at a peak, not at a trough. Option C repeats the idea of moving from expansion to decline, which again corresponds to a peak. Option D, None of the above, is incorrect because option A already provides a correct statement.

Common Pitfalls:
Students sometimes mix up peaks and troughs, especially when looking at stylised graphs. Another mistake is to think of the trough only as a single point without recognising it as a turning phase. Keeping the order clear, peak before decline and trough before expansion, makes such questions easier to answer.

Final Answer:
economy is transitioning from a period of decline to a period of expansion