The correct answer is option 'D': Peak and Trough. Let's now understand why this is the correct answer by discussing the different phases of the business cycle.

**Business Cycle:**
The business cycle refers to the recurring pattern of expansion and contraction in the economy. It represents the fluctuations in economic activity over time. The business cycle is characterized by four distinct phases:

1. **Expansion:** This is the phase of the business cycle where the economy is growing and experiencing positive economic growth. During this phase, there is an increase in employment, production, and income. The expansion phase is often associated with increased consumer spending, business investment, and overall economic optimism.

2. **Peak:** The peak is the highest point of the business cycle, representing the end of the expansion phase. It is the point where economic growth reaches its maximum level. At the peak, the economy is operating at or near full capacity, and inflationary pressures may start to build up. The peak is followed by a slowdown in economic activity.

3. **Contraction:** The contraction phase, also known as a recession, is characterized by a decline in economic activity. During this phase, there is a decrease in employment, production, and income. Business investment and consumer spending tend to decline as well. The contraction phase is often accompanied by rising unemployment rates and reduced consumer confidence.

4. **Trough:** The trough is the lowest point of the business cycle, representing the end of the contraction phase. It is the point where economic activity reaches its lowest level. At the trough, the economy is operating at a low capacity, and there may be high levels of unemployment and excess capacity. The trough is followed by a recovery and a new expansion phase.

**Explanation of the Answer:**
The turning points of the business cycle are the moments where the economy transitions from one phase to another. The correct answer, option 'D' (Peak and Trough), indicates that the turning points of the business cycle occur at the peaks and troughs of economic activity.

- The peak represents the transition from the expansion phase to the contraction phase. It is the point where the economy reaches its maximum level of growth before starting to slow down and decline.

- The trough, on the other hand, represents the transition from the contraction phase to the expansion phase. It is the point where the economy reaches its lowest level of activity before starting to recover and grow again.

These turning points are significant because they mark the end of one phase and the beginning of another, signaling changes in economic conditions and trends. They are important for policymakers, businesses, and individuals to monitor as they can provide insights into the current state of the economy and help guide decision-making.