Quiz on Business and Economic Cycles

What is the phase called when GDP is rising and unemployment is falling?

• Slump

• Recession

• Growth

• Boom

What happens during a Boom phase in the business cycle?

• Deflation occurs

• GDP is at its lowest

• Too much spending causing inflation

• High unemployment

What is a Recession characterized by?

• Stable prices

• High inflation

• Falling GDP and rising unemployment

• Rising GDP

What occurs during a Slump?

• Rapid economic growth

• Deflation and high unemployment

• High demand for goods

• Increased living standards

What is the 'recovery' period?

• When GDP is falling

• When the economy moves from slump to growth

• When inflation is at its highest

• When unemployment is rising

What is one effect of reducing GDP?

• Increase in living standards

• Decrease in inflation

• Rise in unemployment

• Higher demand for goods

What does maintaining price stability help achieve?

• High unemployment

• Economic growth

• Lower living standards

• Increased inflation

What is a consequence of high inflation?

• Higher competitiveness of exports

• Rise in employment

• Fall in real incomes

• Increased purchasing power

What does reducing unemployment lead to?

• More government spending on benefits

• Lower output and GDP

• Higher living standards

• Increased income inequality

What is the balance of payments?

• Difference between exports and imports

• Total GDP of a country

• Government spending and taxation

• Unemployment rate in the economy