In the expansion phase of a business cycle,
A) the inﬂation rate decreases, but productive capacity increases.
B) the inﬂation rate and productive capacity decrease.
C) employment increases, but output decreases.
D) employment and output increase.

Question

Quizplus · Accepted Answer

During the expansion phase of a business cycle, employment and output both increase. This is because the economy is growing and there is more demand for goods and services, leading to increased production and more jobs being created. The inflation rate may increase slightly during this phase, but it is not the primary feature of the expansion phase.

In the Expansion Phase of a Business Cycle