Final answer:
The peak is the highest point of economic activity before a downturn or recession, marking the onset of the contraction phase in the business cycle. It is followed by the trough, the lowest point before the economy starts to recover. Understanding of the business cycles provides insight into patterns of economic growth and contractions over time.
Step-by-step explanation:
The point at which a country's GDP and economy reach top efficiency and is immediately followed by a downturn is known as the peak. According to economic theory and the pattern of business cycles, the peak represents the highest point of economic activity before a downturn or recession. This is followed by the contraction phase, leading the economy to eventually hit the trough, which is the lowest point before a recovery begins.
A recession, as noted by experts, spans from the peak to the trough, and the succeeding period of recovery and economic growth extends from the trough back up to the next peak. Analyzing patterns of the U.S. economy since 1900, it's evident that these ebbs and flows are natural occurrences within the larger framework of economic progression. As an example, Table 19.7 highlights these patterns, including the latest recession that began in February 2020 due to the COVID-19 pandemic, which was both severe and short.