Business cycle refers to the movements or fluctuations in the economic activities such as trade and production. The movements can be upward or downward; that is, there are periods of expansion and contraction in the levels of economic activity. Thus, there is a wave-like pattern in the business cycle. It expands, and leads to a peak and then it contracts and leads to a trough. Thus, the business cycle consists of four phases. Peak is the point of high activity and trough is the point of low activity. It can be well represented by the following diagram.
Today’s quiz is related to the expansion phase. Expansion phase includes recovery and prosperity. During the recovery period, the economy recovers itself; the existing opportunities are expanded and new created; various improvements are made to improve the economy.
This optimism is manifested in investing the capital in industries and machineries, employing more labor, and in the need of wanting more materials to facilitate this. All related industries are equally expanded. For example, with the expansion of automobiles industries, other industries of glass, steel, and rubber etc. are also expanded. Moreover, cement and machinery industries are also expanded because more roads are needed for automobiles. This demand for labor and material results in the prosperity of workers and the suppliers. This prosperity period may continue to rise until it reaches a peak, and this ends the expansion phase.
Below are given four statements. Your task is to identify the statement that best illustrates the optimism mentioned in the bold-faced sentence as being part of the expansion phase.
All SBD made from this post will be awarded to the participant who chooses the correct answer at the end of the payout period. If there are more than 1 winners, the SBD will be awarded to the one who gave the best explanation of why they choose that answer.
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