The business cycle refers to:
A) The fluctuation of government spending
B) The fluctuations in GDP and economic activity over time
C) The cyclical nature of stock market prices
D) The variation in interest rates
Which phase of the business cycle is characterized by rising GDP, employment, and investment?
A) Recession
B) Depression
C) Expansion
D) Contraction
A recession is generally characterized by:
A) Decreased consumer spending and increased unemployment
B) Rapid increase in business investment
C) High consumer confidence and high inflation
D) Stable economic growth
What typically occurs during the peak phase of the business cycle?
A) Economic activity is at its lowest
B) Unemployment rates are high
C) Consumer spending increases sharply
D) The economy reaches its highest point of activity
Which of the following is most likely to occur during an economic contraction?
A) Increased investment in businesses
B) Decreased consumer confidence
C) High inflation rates
D) A rise in employment levels
A recovery in the business cycle refers to:
A) A return to higher levels of unemployment
B) A return to higher levels of economic activity
C) A period of negative GDP growth
D) A continuous rise in interest rates
During which phase of the business cycle do businesses typically cut production and reduce their workforce?
A) Expansion
B) Contraction
C) Recovery
D) Peak
Which of the following is a common characteristic of the depression phase of the business cycle?
A) Rapid economic growth
B) Extremely high levels of unemployment
C) Record-breaking stock market performance
D) High levels of consumer and business confidence
A period of rising economic activity and expanding GDP is called:
A) Recession
B) Boom
C) Depression
D) Expansion
Which of the following is most likely to happen during the recession phase of the business cycle?
A) Increased borrowing and higher interest rates
B) Decreased investment and reduced consumer spending
C) High government spending on infrastructure
D) High levels of inflation and employment
Which phase of the business cycle is characterized by falling GDP and rising unemployment?
A) Expansion
B) Peak
C) Contraction
D) Recovery
During a period of economic expansion, what typically happens to interest rates?
A) They generally decrease
B) They remain unchanged
C) They tend to increase
D) They become highly volatile
What is the most common indicator of the peak phase in the business cycle?
A) High inflation and low unemployment
B) A sharp decline in consumer spending
C) A sudden increase in business bankruptcies
D) A rapid decline in the stock market
A decrease in consumer confidence during an expansion phase may lead to:
A) Increased savings
B) Lower government spending
C) Increased business investment
D) A slowdown in economic growth
Which of the following typically happens during the recovery phase of the business cycle?
A) The economy contracts further
B) GDP starts to rise
C) Interest rates are at their highest
D) Consumer spending remains low
The period of negative economic growth that lasts for two or more quarters is known as:
A) A recession
B) A recovery
C) A boom
D) A depression
What is a common effect of inflation during the peak phase of the business cycle?
A) Decreased prices for goods and services
B) Decreased wages and salaries
C) Rising costs of living and goods
D) Deflationary pressures on the economy
Which of the following is a possible consequence of a long recession?
A) Decreased government spending
B) Business and consumer confidence may be severely impacted
C) High inflation rates
D) Increased productivity and output
Which of the following is most likely to be observed in the expansion phase of the business cycle?
A) Increased demand for goods and services
B) Increased unemployment
C) Economic contraction
D) A significant decrease in inflation
A fall in unemployment during the expansion phase of the business cycle is primarily due to:
A) Reduced consumer spending
B) Increased business investment
C) Higher interest rates
D) Decreased production
Which of the following is an impact of economic contraction on the stock market?
A) Stock prices tend to rise
B) Stock prices remain stable
C) Stock prices typically decline
D) Stock prices are unaffected
During a business cycle expansion, which of the following typically increases?
A) Employment
B) Unemployment
C) Bankruptcy rates
D) Deflation
In which phase of the business cycle do central banks typically lower interest rates?
A) Expansion
B) Peak
C) Contraction
D) Recovery
Which of the following is most likely during the peak phase of the business cycle?
A) Decreasing inflation
B) Increased unemployment
C) High levels of investment
D) Falling consumer confidence
During the recovery phase of the business cycle, what typically happens to consumer confidence?
A) It increases
B) It decreases
C) It remains unchanged
D) It becomes highly volatile
In which phase of the business cycle do businesses typically experience lower profits and may lay off workers?
A) Expansion
B) Peak
C) Contraction
D) Recovery
Which of the following is most likely to happen during the depression phase of the business cycle?
A) Strong economic growth
B) A prolonged decrease in economic activity
C) High levels of business investment
D) An increase in consumer demand
Which factor typically increases during the recovery phase of the business cycle?
A) Inflation rates
B) Consumer and business confidence
C) Unemployment rates
D) Borrowing costs
