Final answer:
At the peak of a business cycle, a country typically experiences economic contraction and decreased production. The Phillips Curve model indicates an inverse relationship between inflation and unemployment, where one tends to fall as the other rises. otpion d is answer
Step-by-step explanation:
If a country is currently at the peak of a business cycle, the most accurate description of what typically will happen next is that there will be economic contraction and decreased production. At the peak of a business cycle, the economy is at its highest point in terms of GDP, employment, and output.
However, because the economy tends to cycle through phases, after the peak comes the contraction phase, where economic activity slows down, production decreases, and inventory begins to accumulate. Unemployment typically starts to rise as businesses adjust to the lower demand for goods and services. This is in contrast to the expansion phase, where economic activity is growing.
The Phillips Curve model described in The Keynesian Perspective chapter illustrates why inflation and unemployment typically have an inverse relationship in the short run.
During periods of economic expansion, when demand for goods and services increases, employers hire more workers, leading to a decrease in unemployment. However, as the labor market tightens, workers are able to demand higher wages, which can lead to increased costs for businesses and ultimately to higher prices, or inflation.
Conversely, during economic contractions, unemployment tends to rise as demand for labor decreases, which can put downward pressure on wages and prices, leading to lower inflation. otpion d is answer