Which of the following statements is true? a. The four phases of the business cycle, in order, are peak, recovery, trough, and recession. b. When unemployment is rising, then real GDP is rising. c. The economic problem typically associated with a recovery is rising unemployment. d. Full employment exists in an economy when the unemployment rate equals the sum of frictional and structural unemployment rates.

The business cycle has four phases: expansion, peak, contraction (recession), and trough. An expansion sees overall economic growth and improved business activity, whereas, a peak marks the end of the expansion phase. The contraction phase (recession) witnesses a decline in economic growth and business activity, while the trough refers to the lowest point of a recession before a recovery begins.

Unemployment rates and real GDP typically have an inverse relationship. When the unemployment rate is rising, real GDP is usually decreasing as fewer people are employed and contribute to economic growth. On the other hand, when the unemployment rate is declining, real GDP tends to increase as more people are employed, contributing to the economy's overall growth.

During a recovery phase, the economy is improving after a recession, and businesses start hiring more employees. As a result, unemployment generally declines during a recovery.

Full employment occurs in an economy when all available labor resources are used most efficiently, and the unemployment rate is at its lowest possible level. Full employment does not mean zero unemployment because there will always be frictional and structural unemployment. Frictional unemployment refers to temporary unemployment experienced while transitioning between jobs. In contrast, structural unemployment results from a mismatch between the skills of job seekers and the requirements of available jobs. Now, let's go back to the given options and evaluate which statement is true. a. The order of phases is incorrect; the correct order is expansion, peak, contraction, and trough. b. This statement is false because an increase in unemployment generally leads to a decrease in real GDP. c. This statement is false because unemployment typically declines during a recovery. d. This statement is true, as it correctly defines the concept of full employment. So, the correct answer is:

d. Full employment exists in an economy when the unemployment rate equals the sum of frictional and structural unemployment rates.