Question

which of the following leads to the end of a boom period in the business cycle
A) Rise in interest rates
B)A reduction in consumer demand resulting from inflation
C) A natural disaster resulting in greater demand for housing construction
D) A rise in prices resulting from higher production costs

Answer 1

Answer:

B)A reduction in consumer demand resulting from inflation

Explanation:

A reduction in consumer demand resulting from inflation leads to the end of a boom period in the business cycle.

Inflation is the the end of demand. Consumers tend to restrict and compose their demands when inflation hits. It basically the rise of market prices. The consumer demands less, therefore the producers are producing less and the profit chart is falling.

A business flourishes only when the consumers demand their products. If the consumers stop, the business also declines.