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Definition: Peak

Peak is one of the stages of the business cycle. The business cycle describes the phases of growth and decline in an economy which is primarily caused by the all the forces of supply and demand. The goal of economic policy is to keep the economy in healthy condition enabling everyone to get jobs but inflation should be avoided at the same time. But many factors are responsible for the economic factors. When there is confidence in the future the economy grows and vice versa when the confidence is low.

The four stages of business cycle are contraction,trough,expansion and peak. The National Bureau of Economic Research analyses the economic indicators like growth rate of real gross domestic product and monthly figures such as employment, real personal income etc. to determine the phases in the business cycle. Business cycle fluctuations occur around a long-term growth trend

Peak is a state of irrational exuberance “in the economy. The economic expansion is slow in this phase and this is the last phase before the recession starts i.e. it is the high point at the end of economic expansion before the start of contraction. In the 2008 recession, the peak occurred in the third quarter 2007, when the GDP growth was 2.7%.

Some notable points about peak are:

• It is the point of highest price for security or market at a given point of time

• Highest point in the business cycle with the highest GDP growth that immediately precedes the beginning of contraction

• It is the highest level of production in the economy

• The bad thing about peak is that it is the transition from economic expansion to economic contraction i.e. the turning point

• Though peak is the highest point, it is not necessarily something we want. It may so happen that we never want to reach the peak



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