Future Business Leaders of America (FBLA) Business Management Practice Test

What does expansion typically indicate about employment and wages?

1. Many workers are laid off.

2. Unemployment is low and wages are competitive.

3. Some workers are laid off as businesses cut production.

4. Wages are decreasing.

The correct answer is: Unemployment is low and wages are competitive.

When expansion occurs in an economy, it usually signifies a period of growth where businesses are increasing their production and sales. During this time, companies often hire more employees to meet the growing demand for their products and services. As a result, unemployment tends to be low since there are more job opportunities available. Additionally, with increased demand for labor, employers may offer competitive wages to attract and retain skilled workers. This competition for talent can lead to wage growth, benefiting employees. Therefore, the context of an expanding economy is typically characterized by low unemployment and increasing wages, aligning with the correct answer. The other choices reflect scenarios that are contrary to economic expansion; for instance, layoffs and wage decreases are more associated with contraction periods when businesses scale back due to reduced demand.