The labeling is as follows: 7. Recovery, 3. Expansion, 6. Peak, 5. Growth,1. Recession, 2. Trough,4. Depression
Recovery: The recovery phase begins when the economy reaches the trough of a recession and starts to grow again. This is characterized by increasing output, employment, and consumer spending.
Expansion: The expansion phase is the longest phase of the business cycle, and it is characterized by steady economic growth. During this phase, output, employment, and consumer spending all continue to rise.
Peak: The peak is the highest point of the business cycle, and it is characterized by maximum output, employment, and consumer spending.
Recession: The recession phase begins when the economy reaches the peak of the business cycle and starts to decline. This is characterized by decreasing output, employment, and consumer spending.
Trough: The trough is the lowest point of the business cycle, and it is characterized by minimum output, employment, and consumer spending.
Depression: A depression is a prolonged and severe recession. During a depression, output, employment, and consumer spending all decline significantly.
Therefore, the following are identified in the graph:
Recovery: The arrow pointing up from the trough.
Expansion: The upward slope of the curve from the trough to the peak.
Peak: The highest point of the curve.
Growth: The upward slope of the curve, regardless of whether it is in an expansionary or recovery phase.
Recession: The downward slope of the curve from the peak to the trough.
Trough: The lowest point of the curve.
Depression: A prolonged and severe recession.