CA Foundation Paper 4

Business Cycles MCQ

Chapter 5 • 30 Questions from ICAI Study Material

Questions

30

Est. Time

23 min

Exam Weight

5-8%

Source

ICAI Book

Sample Questions: Business Cycles

Preview 8 of 30 MCQs from Chapter 5

1. The term business cycle refers to

A) the ups and downs in production of commodities
B) the fluctuating levels of economic activity over a period of time ✓
C) decline in economic activities over prolonged period of time
D) increasing unemployment rate and diminishing rate of savings

2. A significant decline in general economic activity extending over a period of time is

A) business cycle
B) contraction phase ✓
C) recession
D) recovery

3. The trough of a business cycle occurs when _____ hits its lowest point.

A) inflation in the economy
B) the money supply
C) aggregate economic activity ✓
D) the unemployment rate

4. The lowest point in the business cycle is referred to as the

A) Expansion.
B) Boom.
C) Peak.
D) Trough. ✓

5. A leading indicator is

A) a variable that tends to move along with the level of economic activity
B) a variable that tends to move in advance of aggregate economic activity ✓
C) a variable that tends to move consequent on the level of aggregate economic activity
D) None of the above

6. A variable that tends to move later than aggregate economic activity is called

A) a leading variable.
B) a coincident variable.
C) a lagging variable. ✓
D) a cyclical variable.

7. Industries that are extremely sensitive to the business cycle are the

A) Durable goods and service sectors.
B) Non-durable goods and service sectors.
C) Capital goods and non-durable goods sectors.
D) Capital goods and durable goods sectors. ✓

8. A decrease in government spending would cause

A) the aggregate demand curve to shift to the right.
B) the aggregate demand curve to shift to the left. ✓
C) a movement down and to the right along the aggregate demand curve.
D) a movement up and to the left along the aggregate demand curve.