The correct answer is:A
Increased inflation (higher sales prices and higher costs),difficulty in finding suitable candidates to fill roles and higher interest rates
As an economy approaches its peak,inflation increases because price increases ‘soak up’high demand as productivity peaks. Unemployment is low so businesses struggle to fill vacancies.
The option stating,High export demand, increasing growth rates, high inflation and high interest rates is incorrect—export demand is affected by foreign demand not domestic,and growth rates are unlikely to be increasing as the conomy reaches its peak—they will decrease.
The option, Reducing inflation,falling demand,reducing investment,increasing unemployment describes a recession.
The final option is incorrect because as an economy peaks a contractionary fiscal policy is likely to be employed implying lower government spending and higher taxation.
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