ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Economic expansion happens when real GDP grows from a trough to a peak within two or more subsequent quarters. The expansion occurs during times of economic stimulation, where there is a rise in employment, followed by consumer confidence and discretionary spending.

Detailed explanation-2: -An economic expansion is associated with: increase in production/output • decrease in unemployment • increase in wages • increase in consumer spending. As the economy expands, businesses generally see an increase in sales or demand for their products.

Detailed explanation-3: -For example, lower interest rates make it cheaper for businesses to expand their operations and for consumers to make large purchases. In addition, increasing levels of consumer confidence can lead to more spending and help to spur economic growth.

Detailed explanation-4: -The two major examples of expansionary fiscal policy are tax cuts and increased government spending. Both of these policies are intended to increase aggregate demand while contributing to deficits or drawing down budget surpluses.