Peak vs Trough
Peak and Trough are two The Business Cycle concepts in AP Economics that students often mix up. In short: peak is the peak is the highest point of economic activity in a business cycle. Meanwhile, trough is the trough is the lowest point of economic activity in a business cycle. Here is how they compare side by side.
The peak is the highest point of economic activity in a business cycle.
The peak represents the end of an expansion and the beginning of a contraction. At the peak, an economy's real GDP stops increasing and starts to decline. Unemployment is low, and inflation may be high.
The trough is the lowest point of economic activity in a business cycle.
The trough represents the end of a contraction and the beginning of an expansion. At the trough, an economy's real GDP stops decreasing and starts to increase. Unemployment is high, and inflation is typically low.
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