A22.1 Business Cycle

A22.1 Business Cycle

12th Grade

15 Qs

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A22.1 Business Cycle

A22.1 Business Cycle

Assessment

Quiz

Business

12th Grade

Practice Problem

Easy

Created by

Rathmorebus Rathmorebus

Used 4+ times

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15 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What characterises an economic boom?

High levels of unemployment

High levels of consumer and business confidence

Decreasing consumer spending

Low levels of investment

Answer explanation

An economic boom is characterized by high levels of consumer and business confidence, leading to increased spending and investment. This contrasts with high unemployment, decreasing spending, and low investment, which indicate economic downturns.

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

During an economic boom, what tends to happen to inflation?

Inflation decreases

Inflation remains stable

Inflation increases

Inflation is unaffected

Answer explanation

During an economic boom, demand for goods and services increases, leading to higher prices. This results in inflation rising as more money chases the same amount of goods, making 'Inflation increases' the correct choice.

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following is a possible positive effect on businesses during a boom?

Decreased demand for consumer durables

High levels of competition

Increased demand and high prices leading to higher profits

Reduced investment in new plant and machinery

Answer explanation

During a boom, increased demand for goods often leads to higher prices, which can significantly boost profits for businesses. This positive effect contrasts with decreased demand or reduced investment, making it the correct choice.

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is a common business strategy during a recession?

Increase stock levels

Close unprofitable areas of business

Expand production capacity

Increase marketing spending on luxury goods

Answer explanation

During a recession, businesses often close unprofitable areas to reduce costs and focus on core operations. This strategy helps maintain financial stability, unlike increasing stock levels or expanding production, which can be risky.

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the official definition of a recession?

A fall in GDP for one quarter

Two successive quarters of negative GDP growth

A rise in unemployment for one quarter

A rise in inflation for two consecutive quarters

Answer explanation

A recession is officially defined as two successive quarters of negative GDP growth, indicating a significant decline in economic activity. This distinguishes it from other economic indicators like unemployment or inflation.

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following is a possible negative effect on businesses during a recession?

Increased consumer confidence

Rising demand for luxury goods

Falling demand leading to excess stock

High levels of business investment

Answer explanation

During a recession, consumer spending typically decreases, leading to falling demand for products. This can result in excess stock for businesses, which is a negative effect as it ties up resources and increases costs.

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

During a boom, what is a likely business reaction to high consumer demand?

Reduce production capacity

Invest in plant and machinery to increase capacity

Decrease marketing efforts

Lay off staff

Answer explanation

During a boom, high consumer demand typically leads businesses to invest in plant and machinery to increase production capacity, ensuring they can meet the demand. This is the most logical response to capitalize on the favorable market conditions.

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