Question : The term "business cycle" refers to:
Option 1: Fluctuations in economic growth over time
Option 2: Fluctuations in inflation over time
Option 3: Fluctuations in unemployment over time
Option 4: Fluctuations in interest rates over time
Correct Answer: Fluctuations in economic growth over time
Solution : The correct answer is (a) Fluctuations in economic growth over time.
The term "business cycle" refers to the recurring pattern of fluctuations in economic activity over time. It represents the ups and downs, expansions and contractions, that occur in an economy.
The business cycle consists of four phases: expansion, peak, contraction, and trough. During an expansion, the economy experiences increased economic growth, rising employment, and higher levels of production. The peak represents the highest point of economic activity before the cycle turns downward.
The business cycle is influenced by various factors such as changes in aggregate demand and supply, shifts in consumer and investor confidence, government policies, technological advancements, and external shocks. Understanding the business cycle helps economists, policymakers, and businesses anticipate and respond to changes in economic conditions.
Question : The Phillips curve shows the relationship between:
Option 1: Inflation and unemployment
Option 2: GDP and inflation
Option 3: GDP and unemployment
Option 4: Interest rates and inflation
Question : The short-run Phillips curve suggests that there is a trade-off between:
Question : A recession is characterized by:
Option 1: High inflation and high unemployment
Option 2: Low inflation and high unemployment
Option 3: High inflation and low unemployment
Option 4: Low inflation and low unemployment
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