Question

Regarding the economy, what are the terms expand and contract generally used to describe?

a.changes in monetary and fiscal policy
b. rising and falling levels of budget deficits and debt
c. fluctuations in economy
d. changes in tax revenue

Answer 1

C. Fluctuations in the economy. An economy can be expanding when it is coming out of a trough and proceeding towards a peak in its economic activity and business cycle, or contracting when it is declining from a peak to a trough.

Answer 2

The answer is: C.Fluctuations in the economy

Each countries would experience different periods when they are economically productive and when they aren't.

During productive period, the country is experiencing economic expansion (which is marked by an increase in infrastructure and standard of living). During non-productive period, the country is experiencing economic contraction (which is marked by high unemployment and lower standard of living).  The terms 'fluctuations' define the changes between one economic condition to another.