Business Cycle Review

Front

The Business Cycle measures ___ over time.

Back

economic growth

Answer explanation

The Business Cycle measures economic growth over time, reflecting fluctuations in economic activity, including expansions and contractions. It does not directly measure wealth or inflation.

Front

The business cycle is made up of how many phases?

Back

4

Answer explanation

The business cycle consists of 4 phases: expansion, peak, contraction, and trough. This framework helps in understanding economic fluctuations, making 4 the correct answer.

Front

GDP declines during a(an)

Back

contraction

Answer explanation

GDP declines during a contraction, which is a phase of the business cycle characterized by reduced economic activity. In contrast, peaks and expansions indicate growth, not decline.

Front

Economic recovery begins-

Back

at the end of a recession (trough)

Answer explanation

Economic recovery begins at the end of a recession, known as the trough. This is the point where economic activity starts to rise again after a period of decline.

Front

If a news headline says, "Finally!!! 2 straight months of increased jobs." Where on the business cycle is the current economy?

Back

Expansion/Growth/Recovery

Answer explanation

The headline indicates two consecutive months of job growth, which signifies economic improvement. This aligns with the Expansion/Growth/Recovery phase of the business cycle, where economic activity is increasing.

Front

Where on the business cycle is the current economy if a news headline says, "3 months of consecutive job losses is impacting consumer confidence"?

Back

Contraction/Recession

Answer explanation

The headline indicates 3 months of consecutive job losses, which typically signals a decline in economic activity. This aligns with the Contraction/Recession phase of the business cycle, where consumer confidence is negatively impacted.

Front

Which of the following is a peak? A, B, C, D

Back

A

Answer explanation

Choice A is identified as a peak because it represents the highest point in the given context, distinguishing it from the other options B, C, and D, which do not meet the criteria for being a peak.

Front

Which of the following is an expansion, or recovery? A, B, C, D

Back

D

Answer explanation

Choice D represents an expansion or recovery phase, indicating a period of growth or improvement following a downturn. The other options do not fit this definition.

Front

Which of the following is a trough? A, B, C, D

Back

C

Answer explanation

A trough is a low point in a wave or a cycle. In this context, option C represents the correct trough, as it visually depicts the lowest point compared to the other choices.

Front

Which of the following is a recession, or contraction? A, B, C, D

Back

B

Answer explanation

A recession, or contraction, is typically identified by a decline in economic activity. Choice B reflects this definition, indicating a period of negative growth, while the other options do not meet the criteria.