Question

multiple select question
select all that apply
select all of the events that may occur during the contraction phase of the business cycle.

• government spending declines
• gdp rises
• investment spending falls
• consumer spending increases

Explanation:

• During the contraction phase of the business cycle (recession), economic activity slows. Government spending may decline as tax revenues fall and fiscal policies might adjust, or economic conditions lead to reduced government outlays. Investment spending typically falls as businesses become less optimistic and reduce capital expenditures.
• GDP rises is incorrect as contraction is a period of declining economic output, so GDP falls. Consumer spending usually decreases (not increases) as incomes are stagnant or falling and consumer confidence drops.

Answer:

• Government spending declines (checked)
• Investment spending falls (checked)