QUESTION 3/3

Question

Assume that an economy is experiencing moderate inflation, an unemployment rate of 3.9% and an increase of 4% in GDP. This country is likely experiencing a period of

peak

expansion
stagflation

recession

Answer 1

Given the information provided:

• Moderate inflation
• Unemployment rate of 3.9% (which is considered low)
• An increase of 4% in GDP (which indicates growth)

The economy is likely experiencing a period of expansion. During an expansion, economic activity increases, reflected by rising GDP, low unemployment rates, and can be accompanied by moderate inflation.

So the correct answer is: expansion.