Business Cycles and Aggregate Demand
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Questions and Answers

Business cycles typically last from 2 to 10 years

True

The peak of a business cycle is the maximum point in a recession

False

A depression is a less severe form of recession

False

If an economy enters into a recession, we expect to see an increase in investment

<p>False</p> Signup and view all the answers

Stock prices are expected to decline during a recession

<p>True</p> Signup and view all the answers

During a recession, what is the expected impact on stock prices?

<p>They are expected to decline due to declining profits</p> Signup and view all the answers

What is the expected impact on investment during a recession?

<p>It declines due to expected decline in real GDP, sales, and profits</p> Signup and view all the answers

What is the defining characteristic of a depression compared to a recession?

<p>It has a larger decline in output and employment, lasting longer</p> Signup and view all the answers

What are the two main phases of a business cycle?

<p>Expansion (boom) and contraction (recession)</p> Signup and view all the answers

What organization is concerned with studying the business cycle and announcing whether the economy is going to enter into a recession in the USA?

<p>NBER</p> Signup and view all the answers

What is the typical duration of a recession in the context of business cycles?

<p>6 to 12 months</p> Signup and view all the answers

What is the defining characteristic of a depression compared to a recession?

<p>Larger decline in output and employment</p> Signup and view all the answers

What is the maximum point in an expansion called in a business cycle?

<p>Peak</p> Signup and view all the answers

During a recession, what is the expected impact on stock prices?

<p>Decline due to expected decline in profits</p> Signup and view all the answers

What organization is concerned with studying the business cycle and announcing whether the economy is going to enter into a recession in the USA?

<p>NBER</p> Signup and view all the answers

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