Boom stage true statement.

• A. Growth leads to inflation but with no change in unemployment
• B. Imports always fall
• C. Capacity is fully utilized and unemployment is low
• D. Tax revenue decreases

Answer: (C)

In the boom phase, demand is very strong and production runs at or near full capacity. Firms hire more workers to meet this rising demand, so unemployment falls and there’s little idle capacity left in the economy. That combination—capacity being fully utilized and unemployment being low—best matches the boom conditions, making it the true statement.

In a boom, inflationary pressure often rises because demand outstrips supply, and imports can climb as higher incomes push more purchases from abroad. Tax revenues typically increase due to higher incomes and profits, not decrease.

The other statements don’t fit a boom: growth with inflation but no change in unemployment contradicts the usual fall in unemployment; imports don’t necessarily fall during a boom; and tax revenue would be expected to rise, not fall.