Question

in the above figure, a recession begins at point ____ and an expansion begins at point ____.
options:

• d; c
• b; a
• b; c
• a; b

Explanation:

A recession begins at a peak (where Real GDP stops increasing and starts decreasing), and an expansion begins at a trough (where Real GDP stops decreasing and starts increasing). In the graph, point \(a\) is a peak (Real GDP starts to fall after \(a\), so recession begins at \(a\)), and point \(b\) is a trough (Real GDP starts to rise after \(b\), so expansion begins at \(b\)).

Answer:

a; b