Which economic phase is typically characterized by a decline in business activity?

The economic phase that is typically characterized by a decline in business activity is a recession. During a recession, economic indicators such as GDP, employment, and consumer spending generally decrease. Businesses may experience lower sales, prompting them to cut back on production and workforce, which contributes to a cycle of economic decline. This phase can lead to increased unemployment and reduced consumer confidence, further perpetuating the downturn.

In contrast, the expansion phase represents a period of economic growth where business activity is increasing, characterized by rising GDP and employment rates. Recovery suggests a rebound after a downturn, during which the economy starts to improve but is not yet fully back to pre-recession levels. A boom indicates a period of high economic growth and strong business activity, typically featuring high employment and consumer spending. Understanding these phases helps in analyzing economic trends and their impacts on businesses and consumers.