Question
business delays launching a new product due to signs of slowing consumer demand and rising unemployment.
Which phase of the business cycle is influencing this decision, and why is caution necessary?
Peak; because growth is at its highest
Contraction; because economic activity is declining
Expansion; because demand is increasing
Trough; because recovery has just begun
Which phase of the business cycle is influencing this decision, and why is caution necessary?
Peak; because growth is at its highest
Contraction; because economic activity is declining
Expansion; because demand is increasing
Trough; because recovery has just begun
Answers
GPT-4o mini
The correct choice is **Contraction; because economic activity is declining**.
During the contraction phase of the business cycle, economic activity decreases, which is often characterized by signs such as slowing consumer demand and rising unemployment. In this context, businesses may decide to delay launching new products as a precautionary measure to avoid potential losses. Caution is necessary because if consumer demand is weakening and unemployment is rising, there may be less disposable income available for consumers to spend, making it risky to introduce new products that may not sell well in a declining economic environment.
During the contraction phase of the business cycle, economic activity decreases, which is often characterized by signs such as slowing consumer demand and rising unemployment. In this context, businesses may decide to delay launching new products as a precautionary measure to avoid potential losses. Caution is necessary because if consumer demand is weakening and unemployment is rising, there may be less disposable income available for consumers to spend, making it risky to introduce new products that may not sell well in a declining economic environment.