ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In the expansionary phase, the economy experiences growth over two or more consecutive quarters. Interest rates are typically lower, employment rates rise, and consumer confidence strengthens. The peak phase occurs when the economy reaches its maximum productive output, signaling the end of the expansion.

Detailed explanation-2: -A business cycle has four main phases – expansion, peak, contraction and trough. In an expansion, households demand more goods and services, businesses hire more workers, and wages and prices typically increase. This phase ends with a peak in economic activity.

Detailed explanation-3: -Expansion is the phase of the business cycle where real gross domestic product (GDP) grows for two or more consecutive quarters, moving from a trough to a peak. Expansion is typically accompanied by a rise in employment, consumer confidence, and equity markets and is also referred to as an economic recovery.

Detailed explanation-4: -Which of the following will most likely occur during the expansionary phase of a business cycle? Real GDP rises, and unemployment falls. Economists usually use the term “recession” to refer to: two or more consecutive quarters of declining real GDP.

Detailed explanation-5: -Unemployment increases during business cycle recessions and decreases during business cycle expansions (recoveries). Inflation decreases during recessions and increases during expansions (recoveries).