The expansion phase is sometimes called recovery. At the peak of the business cycle, real GDP is at a maximum. As the economy approaches the peak, inflation may become a major problem. During the contraction phase of the business cycle, real GDP is decreasing. At the trough of the business cycle, real GDP is at a minimum.
Unemployment becomes an increasingly severe problem as the economy approaches the trough.
The contraction and trough phase are sometimes called a recession. When a recession is particularly severe and prolonged, it is called a depression. The phases of the business cycle differ both in terms of intensity and duration. Both the long-run trend and cyclical movements of real GDP are determined by aggregate demand and aggregate supply.