During a trough, which of the following is true?

• A. Output is at its lowest, unemployment is high, inflation is low
• B. Output is at its peak, unemployment is low, inflation is high
• C. GDP is rising and unemployment falling
• D. Inflation is rising while unemployment falls

Answer: (A)

This question tests how output, unemployment, and inflation behave at the trough of the business cycle. At a trough, output has reached its lowest point, unemployment is high because firms slow hiring or lay off workers, and inflation tends to be low due to weak demand and underutilized resources. The description that matches this situation—output at its lowest, unemployment high, and inflation low—fits best. The other descriptions align with different phases: a peak involves high output and low unemployment with higher inflation; expansion features rising GDP and falling unemployment; inflation rising while unemployment falls can occur during expansion, not at the trough.