Which of the following best describes the expansion phase of the business cycle?

The expansion phase of the business cycle is characterized by an increase in economic activity. During this phase, there is a rise in GDP, which indicates that the overall output of goods and services is growing. Businesses typically experience higher sales, investments, and profits, leading to greater consumer spending. Employment levels often increase as businesses hire more workers to meet rising demand, contributing to a more robust economy. As confidence grows, both consumers and businesses are more likely to spend and invest, further fueling the expansion.

The other options highlight conditions that are not typical of the expansion phase. A decrease in GDP signals contraction, whereas peak economic downturn refers to the height of a recession, indicating a decline in economic activity. Similarly, a steady increase in unemployment implies economic weakening, contrary to the characteristic growth and improvement seen during the expansion phase.