ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -As the economy nears the end of an expansion, interest rates are usually rising, and the wages of workers are usually increasing faster than prices. As a result of rising interest rates and wages, the profits of firms will be falling.

Detailed explanation-2: -As the economy expands, businesses generally see an increase in sales or demand for their products. They will produce more goods and services to meet this increase in demand. As businesses need to produce more goods and services to meet demand, they need to hire more workers.

Detailed explanation-3: -Which of the following will happen when interest rates increase in an economy? The opportunity cost of holding money will increase.

Detailed explanation-4: -Inflation decreases during recessions and increases during expansions (recoveries).