Understanding Economic Cycles

What are the two main phases of the economic cycle?

• Boom and Bust

• Expansion and Contraction

• Growth and Decline

• Expansion and Recession

Which phase of the economic cycle is characterized by the highest level of growth?

• Expansion

• Trough

• Contraction

• Peak

What is the term for a prolonged contraction phase lasting more than a year?

• Deflation

• Depression

• Stagnation

• Recession

Which phase follows the peak in the economic cycle?

• Expansion

• Contraction

• Trough

• Recovery

What does a rising GDP indicate about an economy?

• The economy is producing at a greater level

• The economy is shrinking

• The economy is stagnant

• The economy is in a recession

What is the role of GDP in understanding economic cycles?

• It measures the unemployment rate

• It indicates the level of economic production

• It predicts future economic phases

• It tracks inflation rates

What is a positive economic shock?

• A natural disaster affecting production

• A government policy causing inflation

• A celebrity endorsing a product, increasing its demand

• A sudden decrease in consumer demand

What can cause a negative economic shock?

• A favorable government policy

• A celebrity criticizing a product

• A technological breakthrough

• A celebrity promoting a product

How can government intervention affect economic cycles?

• It always stabilizes the economy

• It can sometimes worsen the situation due to inefficiency

• It eliminates economic cycles

• It has no impact on the economy

Why can't economic cycles be stopped?

• They are controlled by the government

• They are caused by consumer behavior

• They are as natural as weather changes

• They are predictable and avoidable