The Economic Expansion Phase

B

The correct answer is B. Expansion.

Expansion is the phase of the business or economic cycle when economic activity is increasing, and levels of employment and production are high. During this phase, the economy is growing and typically accompanied by rising prices for goods and services. Expansionary periods are characterized by increasing consumer confidence, higher levels of investment, and rising stock prices.

During an expansion, businesses are typically expanding their operations, hiring more workers, and producing more goods and services to meet the growing demand. This leads to a positive cycle of economic growth, as the increased demand for goods and services leads to further investment and expansion.

However, expansionary periods are not always sustainable, and can lead to inflation if demand outstrips supply. Inflation occurs when the prices of goods and services rise too quickly, leading to a decrease in purchasing power and a decrease in the value of money.

At some point, the expansionary period will come to an end, leading to a slowdown in economic activity. This can be caused by a variety of factors, such as rising interest rates, increased competition, or changes in government policy. This marks the beginning of the next phase of the economic cycle, which is typically a contraction or recession.