Question

which of the following is a characteristic of prosperity in the peak phase of the business cycle?

• stagnant prices
• high levels of production
• ambivalence about the economy
• reduced incomes

Explanation:

In the peak phase of the business cycle (prosperity), economic activity is at a high. High levels of production are typical as businesses are operating at full or near - full capacity to meet the high demand during this phase. Stagnant prices are not characteristic (prices may rise or be stable but not stagnant in a healthy peak), ambivalence about the economy is not typical (confidence is usually high), and reduced incomes are the opposite of what happens (incomes are high in prosperity).

Answer:

B. high levels of production (assuming the options are labeled A, B, C, D with A being "stagnant prices", B being "high levels of production", C being "ambivalence about the economy", D being "reduced incomes")