Quiz: Business Cycle

Multiple Choice

1. What is the business cycle? A. A period of economic growth and decline, usually measured in terms of GDP B. An economic system in which production and distribution of goods and services is organized by the government C. A system of economic production and distribution based on private ownership of the means of production D. A period of increasing economic growth and stability

2. What are the four stages of the business cycle? A. Expansion, Recession, Depression, Recovery B. Growth, Inflation, Recession, Stagnation C. Boom, Bust, Recession, Recovery D. Boom, Contraction, Expansion, Recovery

3. What is an example of a business cycle? A. The stock market crash of 1929 B. The Great Recession of 2008 C. The Dot-Com Bubble of the late 1990s D. All of the above

True/False

1. The business cycle is a period of economic growth and decline. True/False

2. The business cycle is a system of economic production and distribution based on private ownership of the means of production. True/False

3. The four stages of the business cycle are Expansion, Recession, Depression, and Recovery. True/False

Fill-in-the-Blank

1. The business cycle is a period of economic ___________ and decline.

2. The four stages of the business cycle are ________, _____, _____, and ________.

3. An example of a business cycle is the ___________ crash of 1929.

Short Answer

1. What is the role of government in the business cycle?

2. What is the purpose of the business cycle?

3. How does the business cycle affect the economy?

Answer Key

Multiple Choice: 1. A 2. A 3. D

True/False: 1. True 2. False 3. True

Fill-in-the-Blank: 1. growth 2. Expansion, Recession, Depression, Recovery 3. stock market

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Business Cycle Practice Sheet

1. What is the business cycle?

   • The business cycle is the periodic but irregular up-and-down movements in economic activity, measured by fluctuations in real GDP and other macroeconomic variables.

2. What are the four stages of the business cycle?

   • The four stages of the business cycle are expansion, peak, contraction, and trough.

3. What is an expansion?

   • An expansion is a period of economic growth that is characterized by rising output, employment, and incomes.

4. What is a peak?

   • A peak is the highest point of economic activity in the business cycle, where economic growth is at its highest and unemployment is at its lowest.

5. What is a contraction?

   • A contraction is a period of economic decline that is characterized by falling output, employment, and incomes.

6. What is a trough?

   • A trough is the lowest point of economic activity in the business cycle, where economic growth is at its lowest and unemployment is at its highest.

7. True or False: The business cycle is regular and predictable.

   • False

8. What is the main cause of the business cycle?

   • The main cause of the business cycle is changes in aggregate demand, or total spending in the economy.

9. What are the two main types of shocks that can cause the business cycle?

   • The two main types of shocks that can cause the business cycle are demand shocks and supply shocks.

10. What is a demand shock?

    • A demand shock is an unexpected change in aggregate demand that can cause an expansion or contraction in economic activity.

11. What is a supply shock?

    • A supply shock is an unexpected change in the supply of goods and services that can cause an expansion or contraction in economic activity.

Answer Key: 1. The business cycle is the periodic but irregular up-and-down movements in economic activity, measured by fluctuations in real GDP and other macroeconomic variables. 2. The four stages of the business cycle are expansion, peak, contraction, and trough. 3. An expansion is a period of economic growth that is characterized by rising output, employment, and incomes. 4. A peak is the highest point of economic activity in the business cycle, where economic growth is at its highest and unemployment is at its lowest. 5. A contraction is a period of economic decline that is characterized by falling output, employment, and incomes. 6. A trough is the lowest point of economic activity in the business cycle, where economic growth is at its lowest and unemployment is at its highest. 7. False 8. The main cause of the business cycle is changes in aggregate demand, or total spending in the economy. 9. The two main types of shocks that can cause the business cycle are demand shocks and supply shocks. 10. A demand shock is an unexpected change in aggregate demand that can cause an expansion or contraction in economic activity. 11. A supply shock is an unexpected change in the supply of goods and services that can cause an expansion or contraction in economic activity.