Which sequence correctly represents the stages of the economic cycle?

Which sequence correctly represents the stages of the economic cycle?

• A. Expansion, peak, contraction, trough
• B. Peak, contraction, trough, expansion
• C. Contraction, expansion, peak, trough
• D. Trough, expansion, peak, contraction

Answer: (B)

The economy moves through four stages in a repeating order: expansion (growth), peak (the high point), contraction (slowing activity), and trough (the low point), then it repeats with expansion again. When you start at the peak, the natural progression is peak → contraction → trough → expansion. This sequence shows the cycle moving forward in time through the turning points and back into growth, which is why it’s the best representation. Since the cycle is cyclical, starting at a different point (like expansion or trough) would still be the same four stages in order, but beginning at the peak and listing the subsequent steps cleanly captures the full progression of one cycle.

The economy moves through four stages in a repeating order: expansion (growth), peak (the high point), contraction (slowing activity), and trough (the low point), then it repeats with expansion again. When you start at the peak, the natural progression is peak → contraction → trough → expansion. This sequence shows the cycle moving forward in time through the turning points and back into growth, which is why it’s the best representation. Since the cycle is cyclical, starting at a different point (like expansion or trough) would still be the same four stages in order, but beginning at the peak and listing the subsequent steps cleanly captures the full progression of one cycle.