Answer :
Final answer:
The peak in the business cycle signifies the highest profits and consumption, followed by a contraction phase when the economy slows down. This cycle of prosperity and recession is known as the business cycle.
Explanation:
The point in the business cycle that is associated with the highest profits and consumption is known as the peak. During this phase, the economy is producing at its maximum output, employment is high, and inflationary pressures are evident, leading to booming business conditions.
On the upswing of the business cycle, there is a general feeling of euphoria as businesses expand, hire workers, and prices rise. However, this prosperity eventually gives way to a downturn, leading to a contraction phase characterized by slowing growth and declining employment.
The movement of the economy from peak to trough and trough to peak constitutes the business cycle, showcasing the alternating phases of prosperity and recession experienced in market economies.
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