What is the final result of the peak phase in the business cycle?

The peak phase in the business cycle represents the point at which economic activity reaches its maximum level before experiencing a downturn. During this phase, indicators such as employment, production, and consumer spending are at their highest. However, as the economy cannot sustain this level of intensity indefinitely, the natural dynamics of the business cycle lead to a subsequent decline in activity.

In this context, the correct answer relates to the transition out of the peak. After the peak, the economy typically begins to contract, moving into a phase characterized by reduced economic output and activity, commonly referred to as an economic turndown or recession. This is a natural progression, as imbalances may arise within the economy, such as inflation, excess inventory, or declining consumer demand.

The other options represent different phases or conditions of the business cycle. Economic expansion refers to the period leading up to the peak, economic stability suggests a balance which may occur at various points in the cycle, and economic growth can happen during the expansion but does not encapsulate the outcome specifically associated with the peak phase itself. Therefore, the peak phase inevitably transitions into a decline, leading to the final result of an economic turndown.