During which phase of the business cycle does economic activity reach its highest level?

The phase of the business cycle when economic activity reaches its highest level is the peak. During this phase, various economic indicators such as employment rates, industrial production, and consumer spending are at their highest. This indicates a robust economy where businesses are operating at full capacity, and demand for goods and services is elevated.

At the peak, the economy experiences maximum output, leading to increased profits for businesses and potentially higher wages for workers. However, this phase is typically followed by a downturn, where growth may slow or reverse, leading into a contraction or a recession. The peak is characterized by a sense of optimism among consumers and businesses, but it’s also important to recognize that it signals the approaching end of an economic expansion.