SIE (Securities Industry Essentials) Practice Exam 2026 - Free SIE Practice Questions and Study Guide

During the contraction phase, the economy is not functioning at its full potential and is in decline. Option A, expansion, is the opposite of the contraction phase as it refers to a period of economic growth and increasing production. Option B, peak, is the highest point in the economic cycle and marks the end of the expansion phase and the beginning of the contraction phase. Option D, recovery, refers to the period of economic growth after a period of contraction, which is not what is being described in the question. Therefore, option C, contraction, is the most appropriate answer.