Which phase of the business cycle occurs after a trough?

The phase of the business cycle that occurs after a trough is known as recovery. During this stage, the economy begins to improve and show signs of growth following a period of contraction. A trough marks the lowest point of the business cycle, indicating a significant downturn in economic activity, including decreased production, lower consumer spending, and rising unemployment.

As the economy enters the recovery phase, indicators such as GDP growth, employment rates, and consumer confidence start to rise. This sets the foundation for the subsequent expansion phase, where economic activity continues to grow at a faster pace. Recovery is crucial as it indicates that the economy is bouncing back from the earlier decline, and businesses begin to reinvest, leading to increased job opportunities and higher incomes, further stimulating demand and consumption in the economy.

This understanding highlights the importance of recovery in the business cycle, distinguishing it from other phases like recession, which is characterized by continued economic decline, or depression, a severe and prolonged downturn, and expansion, which follows recovery.