Exposition: The narrator speaks directly to the reader and we learn within the first few paragraphs that the story will be about a young couple that has fallen on hard times. In fact, the very first sentence spells out that there is only “one dollar and eighty-seven cents. That was all. And sixty cents of it was in pennies.”

Those were hard-earned and hard-saved pennies, as we realize. The home is “shabby,” and Della is the wife with Mr. James Dillingham Young, or Jim, being the husband. We also realize that despite the hard times, the young couple loves each other.

Rising action: We learn the conflict is that Della wants to buy “something fine and rare and sterling” for “her Jim,” but despite scrimping and saving, she had only $1.87 for his present and it is already Christmas Eve. The couple has two possessions

in which they both took a mighty pride. One was Jim's gold watch that had been his father's and his grandfather's. The other was Della's hair.

Climax: Della realizes that she can sell her beautiful hair to obtain the money to buy Jim’s gift. She is thrilled to be able to buy him a chain for his watch because “grand as the watch was, he sometimes looked at it on the sly on account of the old leather strap that he used in place of a chain.”

Falling action: Della gives Jim his present. It is the chain for his watch, for which she sacrificed her hair. In exchange, Jim gives her beautiful combs for her hair, for which he sold his beloved watch.

Resolution: Jim confesses to Della that he sold his watch. The narrator wraps everything up at the end, commenting that Jim and Della were “two foolish children in a flat who most unwisely sacrificed for each other the greatest treasures of their house.” He (the narrator) describes them as the Magi.

The exposition of the story introduces Della and her financial situation and establishes the setting: the day before Christmas, in an unnamed city. Della's husband, Jim, is described, establishing that they are a loving, young couple and are struggling with poverty.

The rising action is the escalation of the conflict. Here, the narrator adds details of Jim and Della's financial situation. Jim is making less money than he had previously, and it is Della's responsibility to stretch their budget, particularly for groceries. The narrator makes clear that she has saved carefully but has only $1.87 with which to buy her husband a gift. The couple's prized possessions are mentioned: Della's long and luxurious head of hair and Jim's inherited gold pocket watch.

The climax of the story occurs when Della decides to sacrifice her beautiful hair for $20 to buy Jim's gift: a gold chain for his watch.

The falling action of the story occurs when Jim comes home and the couple exchanges their gifts; here, it is revealed that Jim has sold his watch to buy elaborate hair combs for Della.

The resolution is the briefest part of the story, as the narrator reflects on the wisdom of what Jim and Della have done: sacrificed their own valuables as an expression of love.

The exposition, or introduction, of the short story "The Gift of the Magi" is the reader's introduction to Della, Jim, and their situation.  Jim and Della are a married couple.  It's obvious that Della loves Jim very much, because her desire to buy him a present is discussed early on in the story.  The exposition also tells the reader that Della and Jim are very poor.  

The rising action is focused on Della's efforts to get enough money to buy Jim a Christmas present.  She can't think of anything except selling her beautiful hair.  She gets $20 for selling her hair, and spends the rest of the afternoon trying to find the perfect gift.  

The climax occurs when Jim gets home and sees Della's newly shortened hair.  

The falling action is Jim and Della discovering that they each bought a present to go with the other person's most prized possession.  Jim bought Della beautiful combs for her hair, which is now gone.  Della bought Jim a chain to go with his watch, which he sold to buy the combs.  

The resolution occurs when Jim and Della happily sit down together to eat dinner.  They know that their love for each other is worth more than any gift that they could have given or received.  

The exposition is the beginning when Delia and Jim Young find themselves in desperate circumstances just a couple of days before Christmas.  The rising action is the decision of Delia to cut her hair in order to sell it to a wigmaker and buy Jim a chain for his cherished pocket watch.  The climax occurs when Jim and Delia discover that Jim has sold his watch to buy hair combs for Delia's now-short hair; the fact that he no longer has a watch to attach the chain to completes the irony.

The falling action is the realization that their gifts are now meaningless but they have given so generously and from their hearts that the actions are more priceless than the possessions.  The resolution is the fact that Jim and Delia remain in love despite their heartbreaking errors. 

Exposition refers to the background information that authors sometimes provide, most often at the beginning of a story, so that readers can understand a bit more about the characters and their situation. In this case, the information provided regarding Della's small savings, their apartment, Jim's salary, and the couple's two prized possessions (his watch and her hair), are the story's exposition.

The rising action begins when Della has stopped crying and leaves her flat. The narrator says,

On went her old brown jacket; on went her old brown hat. With a whirl of skirts and with the brilliant sparkle still in her eyes, she fluttered out the door and down the stairs to the street.

She has, evidently, had some kind of revelation as her passive weeping has stopped and she now "whirl[s]" and "flutter[s]" out the door with a "sparkle" in her eye. The action continues to rise as Della actually does sell her hair, as she frantically shops for the perfect gift for her husband, as she attempts to curl her newly cropped hair into something better than "ravages," as she waits for Jim to get home, when he does return, and as he sees her, for the first time, without

anger, nor surprise, nor disapproval, nor horror, nor any of the sentiments that she had been prepared for. He simply stared at her fixedly with that peculiar expression on his face.

The rising action continues as Della prepares dinner and as Jim pulls a gift from his pocket "and [throws] it upon the table." We still do not know if he is upset or merely surprised about Della's hair, and neither does she. This keeps the tension building up to the climax. We finally understand Jim's feelings when he opens the gift from Della and he says to her,

"Dell, . . . let's put our Christmas presents away and keep 'em a while. They're too nice to use just at present. I sold the watch to get the money to buy your combs. And now suppose you put the chops on."

In this moment, the story's climax, Jim's reticence to speak is now explained. He was never angry, just in some shock that his gift was rendered (temporarily) useless by his wife's generosity and love. The tension disappears as both Della and we, the readers, understand Jim's behavior.  

The story really doesn't have any falling action. We don't learn any more of Jim and Della's evening or life their together after the climax. Instead, the narrator provides some commentary, a resolution of sorts, about what makes Jim and Della's relationship so special and why their gifts, gifts that they sacrificed to give out of their love for one another, are so valuable.  

The exposition of O. Henry's short story "The Gift of the Magi" is found at the beginning with the sentence, "One dollar and eighty-seven cents." The first paragraph goes on to explain how such a little amount of money was obtained, but we don't know by whom until the second paragraph when Della is introduced. She is then described as well as the home in which she and her young husband live. The setting includes the home situation as well as how much Della's husband makes, which isn't much. Then, her hair is described along with Jim's watch, their two most prized possessions. The rising action starts when Della decides to cut and sell her hair in order for her to buy Jim a chain for his watch. The action further rises as Jim comes home to a short-haired wife and Della is worried that he'll not love her anymore. The climax ensues when Jim explains that he sold his watch for the gift of combs that he bought for Della. The falling action is when Jim reveals that he still loves his "girl" and they realize the irony of their situation.

What are the rising and falling action and the climax of "The Gift of the Magi"?

Rising action: The rising action takes place when Della realizes that she only has one dollar and eighty-seven cents to buy Jim a Christmas present and makes a decision to go to a place where they can cut her hair, so she can sell it and obtain money in order to buy something precious for Jim:

"Something fine and rare and sterling--something just a little bit near to being worthy of the honor of being owned by Jim."

Climax: The climax occurs when Jim discovers what Della has done and what she has bought him for Christmas. Della has had her hair cut and sold in order to buy a chain for Jim's watch.

Falling action: The falling action occurs when Jim confesses that he has sold his favorite watch in order to buy hair combs for Della's quite long hair, which is now short. 

They both realize that they have got rid of the most valuable things they had in order to get something for each other which turns out to be useless. However, they both turn out to be wise because their possessions do not matter as much as their deeds--they both wanted to make each other happy, which is the proof of true love.