Understanding Business Cycles

In the context of macroeconomic theory, business cycles refer to the fluctuations in economic activity characterized by periods of expansion and contraction. An important indicator of these cycles is the Gross Domestic Product (GDP), which adds up the value of all final goods and services produced in an economy. Analysts use various metrics to assess the conditions of the economy and predict future trends. In this framework, it is crucial to distinguish between different phases of the business cycle and their corresponding characteristics.

Which of the following statements about the business cycle is accurate?