Which of the following typically occurs during an expansionary phase of a business cycle?

• A. Unemployment rates decrease
• B. Business investment contracts
• C. Consumer spending falls
• D. Gross Domestic Product (GDP) declines

Answer: (A)

Verified step by step guidance

1. Understand the business cycle phases: An expansionary phase is a period when the economy is growing, characterized by increasing economic activity.
2. Recall key indicators during expansion: During expansion, Gross Domestic Product (GDP) typically rises, consumer spending increases, business investment grows, and unemployment rates fall.
3. Analyze each option in the context of expansion: 'Unemployment rates decrease' aligns with expansion because more jobs are created as businesses grow.
4. Evaluate the other options: 'Business investment contracts' and 'Consumer spending falls' are more typical of a contraction phase, not expansion.
5. Conclude that the correct typical occurrence during expansion is that unemployment rates decrease, reflecting improved labor market conditions.