What occurs during the expansion phase of a business cycle?

During the expansion phase of a business cycle, production and sales typically increase as businesses experience growth in demand for their products and services. This growth is often fueled by rising consumer confidence, increased consumer spending, and improved access to credit. As a result, companies ramp up production to meet the heightened demand, which in turn can lead to higher employment rates as businesses may need to hire additional staff to support this increased activity.

This phase is characterized by overall economic improvement, including rising gross domestic product (GDP) and favorable market conditions. In essence, the expansion phase signifies a period of recovery and prosperity within the economy, contrasting sharply with phases of contraction where economic activity declines.