Business Cycles MCQ

Question 1

1. The term business cycle refers to

A) the ups and downs in production of commodities

C) decline in economic activities over prolonged period of time

D) increasing unemployment rate and diminishing rate of savings

Answer

B) the fluctuating levels of economic activity over a period of time ✓

Question 2

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

A) business cycle

C) recession

D) recovery

Answer

B) contraction phase ✓

Question 3

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

A) inflation in the economy

B) the money supply

D) the unemployment rate

Answer

C) aggregate economic activity ✓

Question 4

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

A) Expansion.

B) Boom.

C) Peak.

Answer

D) Trough. ✓

Question 5

5. A leading indicator is

A) a variable that tends to move along with the level of economic activity

C) a variable that tends to move consequent on the level of aggregate economic activity

D) None of the above

Answer

B) a variable that tends to move in advance of aggregate economic activity ✓

Question 6

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

A) a leading variable.

B) a coincident variable.

D) a cyclical variable.

Answer

C) a lagging variable. ✓

Question 7

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.

Answer

D) Capital goods and durable goods sectors. ✓

Question 8

8. A decrease in government spending would cause

A) the aggregate demand curve to shift to the right.

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.

Answer

B) the aggregate demand curve to shift to the left. ✓

Sample Questions: Business Cycles