EC 009

Ups and downs in the level of economic activity over a period of time are called a(n

• business cycle.

• economic system.

• economic growth.

• aggregate supply curve.

Gross domestic product that has been adjusted for inflation is known as

• real GDP.

• GDP per capita.

• aggregate demand.

• econometric models.

A benefit to producers and consumers of a growing economy is that it provides

• workers with guaranteed employment.

• an increase in government control.

• a higher standard of living.

• solutions to international problems.

Why should a businessperson understand business cycles?

• To prevent the cycles from happening

• To make plans that will help to level out cycles

• To determine the cause of each cycle

• To predict the exact beginning of cycles

How long do most business cycles last?

• Two full years

• Two consecutive quarters

• At least 10 years

• Varying lengths of time

The period of time during the business cycle when production and employment increase is called

• peak

• contraction

• trough

• expansion

Which of the following factors characterizes the growth phase of business cycles:

• Consumers are putting more money into savings.

• Demand for resources exceeds their availability.

• Consumers and producers are borrowing more money.

• Producers are reducing their purchases of new goods.

The top of a business cycle is known as the

• peak

• trough

• expansion

• contraction

During which phase of the business cycle would there most likely be shortages of workers in certain skill areas?

• trough

• expansion

• peak

• contraction

During which phase of the business cycle are industries and businesses producing and selling goods at their maximum?

• peak

• expansion

• trough

• contraction