During the contraction phase of the business cycle, which of the following is true?

During the contraction phase of the business cycle, which of the following is true?

• A. Interest rates increase
• B. The length of the time required for deliveries increases
• C. Store inventories decline
• D. The length of the average workweek declines

Answer: (D)

During a contraction, economic activity slows and unemployment rises. With demand for goods and services falling, firms reduce production and often cut the hours workers are scheduled to work rather than laying everyone off immediately. This leads to a shorter average workweek. The other options don’t fit this pattern: interest rates typically fall to stimulate the economy, delivery times aren’t a defining downturn signal, and inventories usually rise or stay high as demand declines, not decline.

During a contraction, economic activity slows and unemployment rises. With demand for goods and services falling, firms reduce production and often cut the hours workers are scheduled to work rather than laying everyone off immediately. This leads to a shorter average workweek. The other options don’t fit this pattern: interest rates typically fall to stimulate the economy, delivery times aren’t a defining downturn signal, and inventories usually rise or stay high as demand declines, not decline.