Question

Identify which stage of the business cycle the country is currently in based on the description shown. The country should have the phase of the business cycle (expansion, peak, contraction, and trough) and a brief explanation. Italy: Citizens of this country report that, for a while, life had been tough; lots of people were jobless, and money was tight. But things are getting much better. Workers are being called back to their jobs, production is improving, and people are spending again.

Answer 1

Based on the description provided, Italy is currently in the expansion phase of the business cycle.

Explanation: The signs of improvement, such as citizens returning to work, increased production, and renewed consumer spending, indicate that the economy is recovering from a previous downturn. This aligns with the expansion phase, which is characterized by rising economic activity, increased employment, and growing consumer confidence following a period of contraction. The mention of previously tough times suggests that Italy has just emerged from a trough and is now experiencing recovery and growth.