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Questions and Answers
Which of the following is a characteristic of the expansion phase of the business cycle?
Which of the following is a characteristic of the expansion phase of the business cycle?
- Decrease in employment rates
- Increase in inflation
- Decrease in consumer spending
- Increase in GDP (correct)
What is the primary cause of a recession in the business cycle?
What is the primary cause of a recession in the business cycle?
- Increase in consumer spending
- Decrease in interest rates
- Decrease in government spending
- Decrease in business investment (correct)
What is the duration of a typical business cycle?
What is the duration of a typical business cycle?
- 3-5 years
- 15-20 years
- 1 year
- 7-10 years (correct)
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Study Notes
Business Cycle Characteristics
- The expansion phase of the business cycle is characterized by economic growth, increasing production, and rising employment.
Causes of Recession
- The primary cause of a recession in the business cycle is a significant decline in aggregate demand, often triggered by a combination of factors such as high interest rates, reduced consumer spending, and supply chain disruptions.
Business Cycle Duration
- The duration of a typical business cycle varies, but it usually lasts around 5-7 years, with expansions often lasting longer than recessions.
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