EXPANSION

 Expansion:

•  The expansion phase is characterised by increase in national output, employment, aggregate demand, capital and consumer expenditure, sales, profits, rising stock prices and bank credit. 
• This state continues till there is full employment of resources and production is at its maximum possible level using the available productive resources. 
• Involuntary unemployment is almost zero and whatever unemployment is there is either frictional (i.e. due to change of jobs, or suspended work due to strikes or due to imperfect mobility of labour) or structural (i.e. unemployment caused due to structural changes in the economy). Prices and costs also tend to rise faster.
•  Good amounts of net investment occur, and demand for all types of goods and services rises. 
• There is altogether increasing prosperity and people enjoy high standard of living due to high levels of consumer spending, business confidence, production, factor incomes, profits and investment.
•  The growth rate eventually slows down and reaches its peak.