Q. With reference to the economic phases of Recovery, Expansion, and Boom, consider the following statements:
1.Recovery marks the turnaround of the economy after a recession, characterized by low prices and increasing production.
2.Expansion is the final stage of the business cycle, occurring just before a trough.
3.Boom is a phase of high GDP growth and commercial activity, typically following the recovery phase.
Which of the statements given above is/are correct?
Answer: B
Notes:
Explanation:
- Recovery follows a recession/depression. It is characterized by low prices (from the downturn), rising demand, growing production, and falling unemployment.
- Expansion is not the final stage of the business cycle. It is an early phase that follows recovery and leads to the peak or boom. The final stage before a trough is typically recession, not expansion.
Boom is marked by significant economic growth, rising GDP, employment, and demand. It usually follows recovery and expansion, before potentially leading into overheating and a new downturn.
