The Business Cycle Quiz

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Questions and Answers

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?

  • 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?

  • 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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