What term describes the phase of the business cycle in which industries increase production?

What term describes the phase of the business cycle in which industries increase production?

• A. Expansion
• B. Recession
• C. Peak
• D. Trough

Answer: (A)

When the economy moves into a period of rising production, that phase is called expansion. As demand for goods and services grows, businesses respond by increasing output, hiring more workers, and investing in capacity. This rise in activity means GDP is growing, unemployment tends to fall, and overall economic confidence improves, which further fuels more production. This is different from a recession, where overall output and employment decline; a peak, which is the high point before activity starts to slow again; and a trough, the low point before a new upturn begins.

When the economy moves into a period of rising production, that phase is called expansion. As demand for goods and services grows, businesses respond by increasing output, hiring more workers, and investing in capacity. This rise in activity means GDP is growing, unemployment tends to fall, and overall economic confidence improves, which further fuels more production.

This is different from a recession, where overall output and employment decline; a peak, which is the high point before activity starts to slow again; and a trough, the low point before a new upturn begins.