The figure given below represents the business cycle of an economy. Figure 7.1 Refer to Figure 7.1.The movement from point A to point B in the figure is most likely to be associated with _____.
A)negative inflation rates.
B)an increase in the aggregate demand for goods and services.
C)lagging economic productivity.
D)an increase in cyclical unemployment.
E)a downward trend in leading economic indicators.

Question

The figure given below represents the business cycle of an economy. Figure 7.1  Refer to Figure 7.1.The movement from point A to point B in the figure is most likely to be associated with _____.
A)negative inflation rates. 
B)an increase in the aggregate demand for goods and services. 
C)lagging economic productivity. 
D)an increase in cyclical unemployment. 
E)a downward trend in leading economic indicators.

Quizplus · Accepted Answer

The movement from point A to point B in the figure represents an expansionary phase of the business cycle, which is often characterized by an increase in the aggregate demand for goods and services, as well as a rise in economic activity, employment levels, and output. Therefore, the correct answer is B. Negative inflation rates, lagging economic productivity, an increase in cyclical unemployment, and a downward trend in leading economic indicators are more likely to be associated with a recessionary phase (moving from point C to point D) or a contractionary phase (moving from point E to point F) of the business cycle.

The Figure Given Below Represents the Business Cycle of an Economy