Suppose an Economy Has Historically Grown at a Rate of 1.25

Multiple Choice

Suppose an economy has historically grown at a rate of 1.25%. Economic activity decreased every quarter over the past year, but the decline stopped this quarter. The economy is expected to grow at a rate of 1.4% in the near future, but monetary authorities are concerned that inflation may increase. This economy is probably in the _____ stage of the business cycle.

A) expansion
B) recovery
C) contraction
D) trough