In which phase of the business cycle are high demand and higher disposable income typically found?

The phase of the business cycle characterized by high demand and higher disposable income is the expansion phase. During this phase, the economy is growing, which often leads to an increase in consumer confidence. As businesses invest and increase production to meet rising demand, employment levels typically rise, contributing to higher disposable incomes among consumers.

In an expansion, robust economic activity encourages businesses to hire more employees and invest in new technologies, resulting in increased wages and overall economic growth. Consumers, feeling more financially secure, are likely to spend more, further driving demand for goods and services. This positive feedback loop contributes to the overall vitality of the economy.

While the peak phase also experiences high demand and disposable income, it represents the point just before the economy begins to slow down. In contrast, during recovery, the economy is still rebounding and may not yet see the same level of high demand and disposable income as during a full expansion. The trough phase signifies a low point in the business cycle, marked by reduced demand and lower disposable incomes. Thus, the expansion phase is the best answer, as it captures the dynamics of high demand and disposable income most accurately.