Business CycleResults #1. When aggregate economic activity is declining, the economy is said to be in a trough a trough Contraction Contraction an expansion an expansion a turning point a turning point #2. The trough of a business cycle occurs when _____ hits its lowest point. the unemployment rate the unemployment rate the money supply the money supply inflation in the economy inflation in the economy aggregate economic activity aggregate economic activity #3. . During recession, the unemployment rate ___________ and output ___________. Falls; falls Falls; falls Rises; falls Rises; falls Falls; rises Falls; rises Rises; rises Rises; rises #4. The term business cycle refers to the ups and downs in production of commodities the ups and downs in production of commodities the fluctuating levels of economic activity over a period of time the fluctuating levels of economic activity over a period of time increasing unemployment rate and diminishing rate of savings increasing unemployment rate and diminishing rate of savings decline in economic activities over prolonged period of time decline in economic activities over prolonged period of time #5. A leading indicator is a variable that tends to move consequent on the level of aggregate economic activity a variable that tends to move consequent on the level of aggregate economic activity None of the above None of the above a variable that tends to move in advance of aggregate economic activity a variable that tends to move in advance of aggregate economic activity a variable that tends to move along with the level of economic activity a variable that tends to move along with the level of economic activity #6. Leading economic indicators are indicators of stock prices existing in an economy are indicators of stock prices existing in an economy are indicators of probable recession and depression are indicators of probable recession and depression are used to forecast probable shifts in economic policies are used to forecast probable shifts in economic policies are generally used to forecast economic fluctuations are generally used to forecast economic fluctuations #7. Economic indicators are – A one stroke solution to check the phase of economy A one stroke solution to check the phase of economy Just an illusion Just an illusion Indicators showing the movement of economy Indicators showing the movement of economy Some activities which predict the direction of economy Some activities which predict the direction of economy #8. The lowest point in the business cycle is referred to as the Expansion Expansion Boom Boom Peak Peak Trough Trough #9. According to Keynes, fluctuations in Economic activities are due to Changes in money supply Changes in money supply Fluctuation in agricultural output Fluctuation in agricultural output Innovations Innovations Fluctuation in aggregate effective demand Fluctuation in aggregate effective demand #10. Business cycle generally originate in free market economies, what is a free market economy? The economy where price is controlled by government The economy where price is controlled by government The economy where private firms control major assets The economy where private firms control major assets The economy where decisions of productions are taken by public sector undertakings The economy where decisions of productions are taken by public sector undertakings The economy where government is in possession of major assets The economy where government is in possession of major assets #11. Industries that are extremely sensitive to the business cycle are the Capital goods and non-durable goods sectors Capital goods and non-durable goods sectors Durable goods and service sectors. Durable goods and service sectors. Capital goods and durable goods sectors. Capital goods and durable goods sectors. Non-durable goods and service sectors. Non-durable goods and service sectors. #12. Which economic indicator is required to predict the turning point of business cycle? Coincident Coincident Leading indicator Leading indicator Lagging indicator Lagging indicator All of the above All of the above #13. The different phases of a business cycle expansion phase always last more than ten years expansion phase always last more than ten years last many years and are difficult to get over in short periods last many years and are difficult to get over in short periods none of the above none of the above do not have the same length and severity do not have the same length and severity #14. Which of the following is not an example of coincident indicator? Industrial production Industrial production inflation inflation New orders for plant and equipment New orders for plant and equipment Retail sales Retail sales #15. Which of the following best describes a typical business cycle? Inflation is followed by rising income and unemployment Inflation is followed by rising income and unemployment Economic expansions are followed by economic growth and development Economic expansions are followed by economic growth and development Economic expansions are followed by economic contractions. Economic expansions are followed by economic contractions. Stagflation is followed by inflationary economic growth. Stagflation is followed by inflationary economic growth. #16. Which of the following is the cause of business cycles? Fluctuations in government spending Fluctuations in government spending All of the above All of the above Fluctuations in investments Fluctuations in investments Fluctuations in aggregate effective demand Fluctuations in aggregate effective demand #17. The most probable outcome of an increase in the money supply is interest rates to fall, investment spending to rise, and aggregate demand to rise interest rates to fall, investment spending to rise, and aggregate demand to rise interest rates to fall, investment spending to fall, and aggregate demand to fall interest rates to fall, investment spending to fall, and aggregate demand to fall interest rates to rise, investment spending to rise, and aggregate demand to rise interest rates to rise, investment spending to rise, and aggregate demand to rise interest rates to rise, investment spending to fall, and aggregate demand to fall interest rates to rise, investment spending to fall, and aggregate demand to fall #18. A significant decline in general economic activity extending over a period of time is recession recession business cycle business cycle recovery recovery contraction phase contraction phase #19. Which of the following statements is correct? The business cycle largely affects small employees The business cycle largely affects small employees The business cycle generally affects all sectors of economy but business sector in particular. The business cycle generally affects all sectors of economy but business sector in particular. The business cycle largely affects the agricultural sector The business cycle largely affects the agricultural sector The business cycle affects low wages workers The business cycle affects low wages workers #20. Peaks and troughs of the business cycle are known collectively as Turning points Turning points Volatility Volatility Equilibrium points. Equilibrium points. Real business cycle events Real business cycle events #21. A variable that tends to move later than aggregate economic activity is called a lagging variable a lagging variable a leading variable a leading variable a coincident variable a coincident variable a cyclical variable. a cyclical variable. #22. Which of the following is not a characteristic of business cycles? Business cycles have serious consequences on the well-being of the society Business cycles have serious consequences on the well-being of the society Business cycles have uniform characteristics and causes Business cycles have uniform characteristics and causes Business cycles are contagious and unpredictable. Business cycles are contagious and unpredictable. Business cycles occur periodically, although they do not exhibit the same regularity. Business cycles occur periodically, although they do not exhibit the same regularity. #23. Which of the following does not occur during an expansion? Business profits and business confidence tend to increase Business profits and business confidence tend to increase Consumer purchases of all types of goods tend to increase Consumer purchases of all types of goods tend to increase Employment increases as demand for labour rises Employment increases as demand for labour rises None of the above None of the above #24. A decrease in government spending would cause the aggregate demand curve to shift to the left the aggregate demand curve to shift to the left a movement down and to the right along the aggregate demand curve. a movement down and to the right along the aggregate demand curve. a movement up and to the left along the aggregate demand curve a movement up and to the left along the aggregate demand curve the aggregate demand curve to shift to the right the aggregate demand curve to shift to the right #25. The four phases of the business cycle are contraction, expansion, trough and boom contraction, expansion, trough and boom expansion, peak, contraction and trough expansion, peak, contraction and trough peak, depression, bust, and boom peak, depression, bust, and boom expansion contraction, peak, and trough expansion contraction, peak, and trough #26. According to ________________ trade cycles occur due to onset of innovations Adam Smith Adam Smith Hawtrey Hawtrey Schumpeter Schumpeter J M Keynes J M Keynes #27. Economic recession shares all of these characteristics except Fall in the levels of investment, employment Fall in the levels of investment, employment Incomes of wage and interest earners gradually decline resulting in decreased demand for goods and services Incomes of wage and interest earners gradually decline resulting in decreased demand for goods and services Investor confidence is adversely affected and new investments may not be forthcoming Investor confidence is adversely affected and new investments may not be forthcoming Increase in the price of inputs due to increased demand for inputs Increase in the price of inputs due to increased demand for inputs finish
