QuestionMay 27, 2025

Which of the following are characteristics of the expansion phase of the business cycle? A) Increase industrial production B) Rising inventories C) Higher consumer debt D) Increasing defaults

Which of the following are characteristics of the expansion phase of the business cycle? A) Increase industrial production B) Rising inventories C) Higher consumer debt D) Increasing defaults
Which of the following are characteristics of the expansion phase of the business cycle? A) Increase industrial production B) Rising inventories C) Higher consumer debt D) Increasing defaults

Solution
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Answer

A) Increase industrial production ### C) Higher consumer debt Explanation 1. Identify Characteristics of Expansion Phase During the expansion phase, economic activity increases. This includes higher industrial production and consumer spending. 2. Analyze Each Option A) Increase in industrial production is typical as businesses produce more to meet rising demand. B) Rising inventories are not characteristic; typically, inventories decrease as sales increase. C) Higher consumer debt can occur as consumers borrow more due to increased confidence. D) Increasing defaults are not typical; defaults usually rise during contractions.

Explanation

1. Identify Characteristics of Expansion Phase<br /> During the expansion phase, economic activity increases. This includes higher industrial production and consumer spending.<br /><br />2. Analyze Each Option<br /> A) Increase in industrial production is typical as businesses produce more to meet rising demand.<br /> B) Rising inventories are not characteristic; typically, inventories decrease as sales increase.<br /> C) Higher consumer debt can occur as consumers borrow more due to increased confidence.<br /> D) Increasing defaults are not typical; defaults usually rise during contractions.
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