Question

And yes, these are all from gradpoint.

Which of the following reflects a “boom” phase in a capitalist economy?

Demand is high, supply is high, and employment is low.

Employment, profits, and incomes are high.

Production increases and spending on goods is low.

Employment, profits, and incomes are low.

Answer 1

The right answer is that employment, profits, and incomes are high in a boom phase of a capitalist economy. Boom means the expansion of an economy, so that, this phase tends to be associated with a high level of spending, low unemployment, rising prices and profits and a high level of output. Employment is high as firms try to increase output by employing more factor of production, including the people who will produce.