If the economy is in the expansionary phase of the business cycle, aggregate demand ______, unemployment _____, inflation _____, and the current account of the balance of payments is likely to move towards_____.

Question

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During the expansionary phase of the business cycle, aggregate demand increases as consumers and businesses are more willing to spend, leading to a decrease in unemployment due to higher production needs. Inflation tends to rise because of increased demand for goods and services. The current account of the balance of payments is likely to move towards a deficit as increased domestic income leads to higher imports.

If the Economy Is in the Expansionary Phase of the Business