ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The highest point of the economy, before a recession begins, is called the peak; conversely, the lowest point of a recession, before a recovery begins, is called the trough. Thus, a recession lasts from peak to trough, and an economic upswing runs from trough to peak.

Detailed explanation-2: -The peak of the cycle refers to the last month before several key economic indicators, such as employment and new housing starts, begin to fall. It is at this point real GDP spending in an economy is at its highest level.

Detailed explanation-3: -The peak phase occurs when the economy reaches its maximum productive output, signaling the end of the expansion. After that point, employment numbers and housing starts begin to decline, leading to a contractionary phase.

Detailed explanation-4: -An economic peak is like a mountain summit. Once the economy reaches this peak, it must come down. This economic peak is the highest point of economic growth and output, resulting in an increase in the GDP. However, economic peaks often cause upward inflationary pressure and devaluation of the currency.

Detailed explanation-5: -As an economy expands and its GDP grows, it will eventually reach a peak. The economy will then begin to contract as it slides down the backside of the peak and goes into recession. From there, the economy will hit a trough-its lowest point in the cycle.