Scenario: It is the year 2035, and many people in the United States are very happy with the state of the economy. Real GDP has risen steadily over the past year, unemployment is low, and workers are confident they will continue to be employed. People are buying homes, refrigerators, cars, and everyday goods. Inflation is rising though, and people are concerned that prices may be rising faster than their incomes. Nonetheless, the stock market is rising and people remain confident. Which of the following statements is true regarding this scenario? The US is in the expansion phase of the business cycle because Real GDP is rising, unemployment is low, and inflation is rising. The US is in the expansion phase of the business cycle because Real GDP is rising, unemployment is low, and inflation is rising. The US is in the contraction phase of the business cycle because people are buying durable and consumer goods and stock market prices are rising. The US is in the contraction phase of the business cycle because people are buying durable and consumer goods and stock market prices are rising. The US is in the stagflation phase of the business cycle because inflation is rising but considers are still confident in the economy.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter14: Money And The Economy

Section: Chapter Questions

Problem 18QP

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Scenario: It is the year 2035, and many people in the United States are very happy with the state of the economy. Real GDP has risen steadily over the past year, unemployment is low, and workers are confident they will continue to be employed. People are buying homes, refrigerators, cars, and everyday goods. Inflation is rising though, and people are concerned that prices may be rising faster than their incomes. Nonetheless, the stock market is rising and people remain confident.

Which of the following statements is true regarding this scenario?

The US is in the expansion phase of the business cycle because Real GDP is rising, unemployment is low, and inflation is rising.

The US is in the expansion phase of the business cycle because Real GDP is rising, unemployment is low, and inflation is rising.
The US is in the contraction phase of the business cycle because people are buying durable and consumer goods and stock market prices are rising.

The US is in the contraction phase of the business cycle because people are buying durable and consumer goods and stock market prices are rising.
The US is in the stagflation phase of the business cycle because inflation is rising but considers are still confident in the economy.

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