Business Cycle Overview - Answers PDF

Business Cycle Overview Answers 1. What is a significant characteristic of the business cycle in both industrialized and developing economies? A. Fluctuations occur only in wealthy nations. B. Unemployment is one of the major economic problems. C. Economic fluctuations can be explained by...

Business Cycle Overview Answers 1. What is a significant characteristic of the business cycle in both industrialized and developing economies? A. Fluctuations occur only in wealthy nations. B. Unemployment is one of the major economic problems. C. Economic fluctuations can be explained by a single universal theory. D. Economic activities remain stable throughout the years. Answer: Unemployment is one of the major economic problems. (B) Unemployment is a major issue that arises during the business cycle, affecting both types of economies. 2. Which phase of the business cycle is defined by business activities reaching their maximum? A. Peak/Prosperity B. Recession C. Trough D. Recovery Answer: Peak/Prosperity (A) In the Peak/Prosperity phase, the economy operates at full capacity and employment levels are high. 3. What typically follows the Peak/Prosperity phase in the business cycle? A. Stagnation B. Expansion C. Recession D. Trough Answer: Recession (C) The Recession phase follows Peak/Prosperity, marked by a decline in economic activity. 4. Which of the following accurately describes a feature of the recession phase? A. Full employment is achieved. B. Increase in total output and employment. C. Stability in income and trade. D. Decline in total output, income, trade, and employment. Answer: Decline in total output, income, trade, and employment. (D) The recession phase is characterized by a decline in key economic measures including output and employment. 5. What can obstruct a country's economic growth during the business cycle? A. Stable political climate. B. Consistent inflation. C. Structural problems within the economy. D. High levels of consumer confidence. Answer: Structural problems within the economy. (C) Structural problems within an economy can prevent it from achieving sustained growth despite temporary increases. 6. Which economic issue is equally prominent in both highly industrialized and developing countries? A. Inflation and unemployment. B. Constant economic growth. C. Inflation is absent. D. Complete economic stability. Answer: Inflation and unemployment. (A) Both inflation and unemployment are recurring issues in various economic contexts including industrialized and developing nations. 7. What is a common consequence of a recession in an economy? A. Decrease in government spending. B. Increase in employment opportunities. C. Reduction in consumer spending. D. Growth in trade relations with other countries. Answer: Reduction in consumer spending. (C) During a recession, consumer spending typically declines due to reduced income and economic uncertainty. 8. Which statement best captures the essence of economic fluctuations? A. They can lead to complex outcomes in both rich and poor nations. B. They are uniform across all economies. C. They do not impact employment levels. D. They are solely caused by government policies. Answer: They can lead to complex outcomes in both rich and poor nations. (A) Economic fluctuations can have various complex effects in both industrialized and developing economies. 9. Which of the following groups is considered outside the labor force? A. Employed individuals on vacation B. Temporary workers seeking full-time employment C. Full-time students not looking for work D. Retired persons actively job hunting Answer: Full-time students not looking for work (C) Full-time students who are not looking for work are classified as outside the labor force. 10. What type of unemployment occurs when workers' qualifications do not match available jobs? A. Frictioal unemployment B. Cyclical unemployment C. Structural unemployment D. Seasonal unemployment Answer: Structural unemployment (C) Structural unemployment arises when there is a mismatch between workers' skills and job requirements. 11. What best describes a characteristic of structural unemployment? A. It affects only seasonal workers. B. It results from changes in technology. C. It is caused by economic downturns. D. It is influenced by temporary illnesses. Answer: It results from changes in technology. (B) Changes in technology can lead to structural unemployment by displacing outdated job roles. 12. Which of the following scenarios exemplifies structural unemployment? A. A factory closing due to low demand for its products B. Workers unable to relocate after a company moves C. A seasonal worker waiting for the next harvest D. A person taking a break due to personal reasons Answer: Workers unable to relocate after a company moves (B) Workers who cannot relocate to a new factory location experience structural unemployment. 13. Which demographic is likely to be part of the labor force? A. Retired persons B. Permanently disabled individuals C. Stay-at-home parents not seeking employment D. Full-time students available for work Answer: Full-time students available for work (D) Full-time students who are available for work can be considered part of the labor force. 14. What is the primary reason for the outflow of Filipino workers to other countries? A. Better work-life balance abroad B. Unemployment in the Philippines C. Cultural exchange opportunities D. Desire for adventure and travel Answer: Unemployment in the Philippines (B) Many Filipinos seek work abroad primarily due to unemployment issues within the country. 15. Which group may face challenges due to a lack of relevant skills? A. Recent college graduates in search of jobs B. Layoff survivors in stable industries C. Individuals in the agricultural job market D. Professionals adapting to new technologies Answer: Individuals in the agricultural job market (C) Individuals in the agricultural sector may lack the necessary skills for available jobs in that field. 16. Which factor is NOT associated with being outside the labor force? A. Individuals actively looking for jobs B. Housewives caring for children C. Seasonal workers off-season D. Temporary illness preventing work Answer: Individuals actively looking for jobs (A) Individuals actively looking for jobs are considered part of the labor force. 17. What was one of the historical factors that led to the opening of the labor market to Middle Eastern countries? A. Political unrest in the Philippines B. High inflation and unemployment in the 1970s C. Increased educational opportunities abroad D. High wages in those countries Answer: High inflation and unemployment in the 1970s (B) High inflation and unemployment during the 1970s prompted the government to seek foreign labor opportunities. 18. What is the Labor Force Participation Rate? A. The proportion of those retired among the working-age population B. The percentage of the total population that is employed C. The number of individuals not available for work D. The ratio of actively employed and unemployed individuals Answer: The ratio of actively employed and unemployed individuals (D) The Labor Force Participation Rate measures the ratio of employed to unemployed individuals in the workforce. 19. How is the unemployment rate defined mathematically? A. Total job vacancies divided by total labor force B. Total unemployed persons divided by total labor force C. Total job applications divided by total population D. Total employed persons divided by the workforce Answer: Total unemployed persons divided by total labor force (B) The unemployment rate is calculated as the number of unemployed persons divided by the total labor force. 20. What demographic does the 'labor force' include? A. Only those currently employed B. Only those who have applied for jobs C. All persons aged 18 and older D. All persons aged 15 and over Answer: All persons aged 15 and over (D) The labor force includes all persons who are 15 years old and over, regardless of their employment status. 21. What impact does unemployment have on Philippine society? A. It leads to reduced productivity and economic loss B. It encourages people to start their own businesses C. It promotes a healthier work-life balance D. It creates more job opportunities Answer: It leads to reduced productivity and economic loss (A) Unemployment leads to a waste of potential productivity, affecting the overall economy negatively. 22. What was a significant issue during President Arroyo's administration that impacted the economy? A. Trade agreements B. Natural disasters C. High employment rates D. Corruption issues Answer: Corruption issues (D) Corruption issues during President Arroyo's administration caused instability and affected the economy. 23. What does a high unemployment rate signify for a country? A. Better education opportunities B. Increased innovation and entrepreneurship C. Unused potential in production D. Economic growth and stability Answer: Unused potential in production (C) A high unemployment rate indicates a loss of potential goods and services that could have been produced. 24. What is a reason why the Philippines continues to rely on foreign labor markets? A. Failure to develop local industries B. Low quality of local jobs C. High demand for Filipino workers abroad D. Dependency on foreign income Answer: Low quality of local jobs (B) The continued reliance on foreign labor markets is partly due to the low quality and availability of jobs in the Philippines. 25. What challenge do Filipinos face by working in foreign countries? A. Limited job flexibility B. Lack of family support C. High costs of living D. Life-threatening risks Answer: Life-threatening risks (D) Many Filipinos take on life-threatening risks when working in certain Middle Eastern countries. 26. Which phase is characterized by a deep recession in the business cycle from 1990 to 1997 in the Philippines? A. Crisis B. Prosperity C. Recovery D. Depression Answer: Crisis (A) The period 1990 to 1997 included a deep recession in 1993, indicating a crisis phase in the business cycle. 27. Endogenous theories of business cycles focus on which type of causes? A. External market forces B. Global trade relationships C. Government policies D. Internal economic conditions Answer: Internal economic conditions (D) Endogenous theories explain business cycles based on internal factors of the economy. 28. According to Wesley Mitchell, how does one phase of the business cycle relate to the previous phase? A. It grows out of the preceding phase B. It completely disrupts it C. It varies randomly D. It ends without impact Answer: It grows out of the preceding phase (A) Wesley Mitchell's theory indicates that each phase grows out of the preceding one. 29. What does the underconsumption theory attribute to the business cycle? A. Excessive savings B. High levels of investment C. Deficiency in purchasing power D. Inflationary pressures Answer: Deficiency in purchasing power (C) Underconsumption theory suggests that low purchasing power is a significant factor in business cycles. 30. What is a potential outcome of a crisis phase in the business cycle? A. Economic stagnation B. Immediate recovery C. Continued prosperity D. Depression Answer: Depression (D) The crisis phase can lead to a depression, according to the business cycle analysis. 31. Which of the following explains the business cycle as a series of cumulative changes? A. Real structural hypothesis B. Self-generating theory C. Exogenous shock theory D. Supply-and-demand theory Answer: Self-generating theory (B) The self-generating theory posits that each condition is a product of the preceding one. 32. What effect does aggressive investment planning have on purchasing power? A. It has no effect on purchasing power B. It typically increases purchasing power C. It stabilizes consumer demand D. It typically decreases purchasing power Answer: It typically increases purchasing power (B) Aggressive investment plans are associated with increasing purchasing power. 33. What does innovation contribute to in the context of the business cycle? A. Emergence of new and better products B. Reduction in production efficiency C. Stagnation of economic growth D. Higher product prices due to limited supply Answer: Emergence of new and better products (A) Innovation is defined as the enhancement of existing production systems, leading to the creation of new and better products. 34. What is a potential outcome of too many producers entering an industry? A. Increased individual profits for all producers B. Enhanced product innovation C. Higher barriers to entry for new firms D. Reduction in overall industry profitability Answer: Reduction in overall industry profitability (D) An influx of producers can reduce individual profit, prompting some to withdraw from the industry. 35. Which period shows a recovery following the deep recession in the business cycle of the Philippines from 1990-2009? A. 1998 to 2001 B. 1990 to 1993 C. 1994 to 1997 D. 2002 to 2005 Answer: 1994 to 1997 (C) After the recession in 1993, the cycle indicated a recovery period from 1994 to 1997. 36. What might happen if savings in a society are not invested, according to the content? A. Overall economic growth B. Increased consumer demand for goods C. A downward turn in production D. High inflation rates Answer: A downward turn in production (C) If savings are not invested, it could lead to a downward turn in production. 37. According to the monetary theory, what should a Central Bank do if inflation threatens the economy? A. Accelerate borrowing to stimulate investment B. Slow the rate of growth of money supply C. Maintain the current rate of money growth D. Increase the rate of money growth Answer: Slow the rate of growth of money supply (B) The Central Bank should slow the rate of growth of money supply to counter inflation. 38. What do exogenous theories of the business cycle focus on? A. Internal factors affecting the economy B. Market regulation and control C. Disturbances outside the economy D. Consumer behavior and spending Answer: Disturbances outside the economy (C) Exogenous theories explain the business cycle based on disturbances that occur outside the economy. 39. What is the consequence of the Central Bank accelerating money growth after inflation is no longer a threat? A. Stagnation of the economy B. Promotion of economic recovery C. Increase in foreign exchange dependence D. Immediate economic collapse Answer: Promotion of economic recovery (B) When inflation is no longer a threat, accelerating money growth can promote economic recovery. 40. What does the underconsumptionist theory criticize about the role of savings in the economy? A. It encourages overproduction of goods B. It is essential for economic growth C. It undermines demand for consumer goods D. It leads to excessive investment opportunities Answer: It undermines demand for consumer goods (C) The underconsumptionist theory argues that excessive focus on savings can suppress demand for consumer goods.