Which stage of the business cycle typically leads to increased employment rates and consumer spending?

The stage of the business cycle that leads to increased employment rates and consumer spending is recovery. During this phase, the economy begins to grow after a downturn, which promotes higher business activity. As businesses start to thrive again, they often need to hire more employees to meet the rising demand for goods and services. This increase in employment leads to more disposable income among consumers, which in turn boosts consumer spending. Overall, recovery signifies a positive shift where both job creation and consumer confidence improve, creating a cycle of growth and economic stability.

In contrast, during a recession or slump, economic activity declines, often resulting in higher unemployment and reduced consumer spending. Contraction refers to a decrease in economic activity, which also correlates with job losses and lower spending, thus not fostering an environment conducive to growth.