Business Cycle Quiz

What follows the peak phase in the business cycle?

• Expansion

• Contraction

• Recovery

• Growth

What makes peaks and troughs in the business cycle difficult to predict?

• Regular intervals

• Irregular length and severity

• Constant growth

• Consistent decline

What are leading indicators?

• Measures that rise or fall after a change

• Measures that rise or fall during a change

• Measures that rise or fall before a change

• Measures that never change

What does a rise in housing starts indicate according to the Census Bureau?

• A decline in economic confidence

• An increase in unemployment

• Enough money and confidence in the economy

• A decrease in consumer spending

What role does inflation play in economic indicators?

• It is unrelated to economic activity

• It is a leading indicator

• It is an important coincident indicator

• It is a lagging indicator

Why do economists use lagging indicators?

• To predict future economic trends

• To confirm that one phase of the business cycle has ended and another has begun

• To determine current economic conditions

• To forecast stock market movements

What happens to the unemployment rate during the peak phase?

• It generally decreases

• It stops decreasing

• It generally increases

• It remains constant

During which phase does the inflation rate generally increase?

• Expansion

• Peak

• Contraction

• Trough

What is the general trend of economic activity during a contraction?

• It increases

• It remains constant

• It decreases

• It stops decreasing

What happens to real GDP during the trough phase?

• It increases

• It stops decreasing

• It decreases

• It remains constant