Which phase of the business cycle is marked by high unemployment and declining sales?

The phase of the business cycle characterized by high unemployment and declining sales is the trough. This stage represents the lowest point of economic activity, indicating that the economy is in a recession. During the trough, consumer confidence is typically low, leading to decreased spending and investment. As a result, businesses experience reduced sales, which often compels them to cut costs, including laying off employees, thus leading to high unemployment rates.

Understanding this stage helps recognize the cyclical nature of economies, where periods of growth and decline occur. The trough is critical because it sets the foundation for recovery; once the economy has hit bottom, it begins to transition to recovery and expansion. This distinction is vital when analyzing economic conditions, as decisions made during the trough can significantly influence future growth.