Question

Two key phases of the business cycle are _____

Answer
a. inflation and recession.
b. inflation and deflation.
c. contraction and expansion.
d. trend and random variation.
.

Answer 1

The correct answer is c.

Contraction means becoming smaller and expansion means becoming larger. Businesses change depending on the state of a company. If a recession occurs, the business will contract and become smaller to save money. If the economy experiences growth, on the other hand, businesses will expand to maximize their profit.