Final answer:
Capital goods industries are good investments during the expansion stage of the business cycle, as this is the time when consumer demand and profits are on the rise, prompting businesses to invest in new equipment and structures. Therefore, the correct answer to the multiple-choice question is: D. expansion.
Step-by-step explanation:
The student has asked about the best time for investing in capital goods industries like industrial equipment, transportation, or construction. Capital goods industries generally perform better during the expansion stage of the business cycle, as this is when profits are climbing and consumer demand is high. This economic phase leads to higher investment in new equipment and infrastructure, which are essential for sustaining economic growth. For example, despite a sluggish economy in 2009, U.S. firms invested $1.4 trillion in new equipment and structures, anticipating future profits.
So, capital goods industries such as industrial equipment, transportation, or construction would be good investments during the expansion stage of the business cycle. This is the period when firms are more likely to add capacity in response to growing consumer demand and increasing profits, which makes it a strategic time for business investment. In contrast, during a weak economy, companies typically become hesitant to make such long-term investments due to lower expectations of profit and uncertain market conditions.