DECA Business Management and Administration Exam Practice – Complete Prep Guide

During the expansion phase of the economy, businesses typically see increased demand for their products and services, which leads to higher sales and subsequently increased profits. This phase is characterized by growth in GDP, increased consumer spending, and overall economic optimism. As consumers feel more confident about their financial stability, they tend to spend more, directly boosting business revenues and profits.

In contrast, decreased consumer confidence, higher unemployment rates, and a decline in investment opportunities are more commonly associated with economic downturns or recessions. During these times, businesses may struggle, leading to lower profits and reduced economic activity. Therefore, the focus on increased profits for businesses during the expansion phase highlights the positive impact of this economic stage on corporate performance.