Business CyclesPYQ - May 2018Question 81 of 20
All Questions

The lowest point in the business cycle is referred to as the:

Options

AExpansion
BBoom
CPeak
DTrough
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Correct Answer

✅ Option d — Trough

All Options:

  • AExpansion
  • BBoom
  • CPeak
  • DTrough

Detailed Solution & Explanation

To understand the lowest point in the business cycle, we need to consider the different phases of the cycle. • The business cycle refers to the fluctuations in economic activity, which includes expansion and contraction. • The contraction phase is characterized by a decline in economic activity, which eventually reaches its lowest point. • This lowest point is referred to as the trough, which is a period of minimum economic activity. The correct answer is the trough because it marks the end of the contraction phase and the beginning of the expansion phase. • In contrast, expansion and boom refer to periods of increasing economic activity, which is the opposite of the lowest point. • The peak, on the other hand, refers to the highest point in the business cycle, which is also not the lowest point. Therefore, the trough is the correct term to describe the lowest point in the business cycle, as it is the point at which the economy is at its weakest before it starts to recover.

About This Chapter: Business Cycles

Paper

Paper 4: Business Economics

Weightage

5%

Key Topics

Phases, Features, Causes

Business Cycles describe the recurring fluctuations in economic activity — Expansion, Peak, Recession, and Trough. This chapter covers the phases, features, and causes of business cycles, along with theories explaining why economies go through regular boom-bust patterns.

View Official ICAI Syllabus

Exam Strategy Tip

This is a lower-weightage chapter but easy to score. Focus on memorizing the four phases and their characteristics. Questions are usually straightforward.

Key Concepts to Understand

Business Cycle

Fluctuations in economic activity (Expansion, Peak, Contraction, Trough).

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More Questions from Business Cycles

Which of the following is not an example of coincident indicator?

Features of Business Cycles include:

Which one is an external cause of business cycles?

During expansion phase, employment:

Economic recession shares all of these characteristics except:

The four phases of the business cycle are:

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