Final answer:
A depression in the context of the business cycle is a prolonged and severe form of a recession, and occurs after a peak in economic activity. It involves extreme declines in GDP, income, and employment. It's not considered a peak, but rather an extended downturn in the economy.
Step-by-step explanation:
Among the four phases of the business cycle, depression is not considered to be a peak, as the original question suggests. Instead, a depression is a prolonged and severe form of a recession. To clarify the concepts:
- The business cycle refers to the economic fluctuations around a long-term growth trend and includes four phases: expansion, peak, recession, and trough.
- A recession is marked by a significant decline in economic activity across the economy that lasts more than a few months. It typically features a decrease in real GDP, income, employment, industrial production, and wholesale-retail sales.
- A recession begins at the business cycle's peak and ends at the trough. If a recession were to become more prolonged and severe, it could potentially turn into a depression. Depressions are characterized by extreme declines in economic activity and are usually accompanied by price decreases, while recessions might not always show significant price changes.
Thus, to address the original question, depression would be most accurately associated with a significant, extended downturn well beyond a peak, opposite in nature to economic prosperity and far deeper than a recession.