Test on Business Cycles: Phases, Indicators, and Causes
Business Cycles: Phases, Indicators, and Causes Explained
Test: Business cycles, Economic indicators, Gross value added
20 questions
Question 1: A double-dip recession is characterized by two consecutive quarters of negative economic growth.
A. Ano
B. Ne
Explanation: The study materials define a technical recession as two consecutive quarters of negative economic growth. A double-dip recession is defined as a recession followed by a short-lived recovery, followed by another recession.
Question 2: According to the provided study materials on endogenous reasons for business cycles, what is the effect of large increases in aggregate supply on the economy?
A. It causes a contraction in the economy.
B. It results in an expansion in the economy.
C. It primarily leads to lower demand without affecting overall economic activity.
D. It stabilizes the economy by preventing any significant changes in output.
Explanation: The study materials state under 'Endogenous Reasons 2. Changes in Aggregate Supply' that 'Large increases in aggregate supply lead to expansion in the economy.' and 'Economic expansion stimulates demand and results in higher levels of economic activity.'
Question 3: Building plans approved is an example of a leading economic indicator.
A. Ano
B. Ne
Explanation: The study materials explicitly list 'Building plans approved' as a leading economic indicator.
Question 4: A high credit rating, such as AAA, indicates that a country carries a very high risk of defaulting on its debt.
A. Ano
B. Ne
Explanation: The study materials state that high ratings like AAA indicate a very low risk of default, not a very high risk.
Question 5: Which of the following is an example of a co-incident economic indicator, according to the provided study materials?
A. Building plans approved
B. Wholesale and retail sales
C. Number of new cars sold
D. Share prices/stock market returns
Explanation: The study materials list 'Wholesale and retail sales' as a co-incident indicator. 'Building plans approved', 'Number of new cars sold', and 'Share prices/stock market returns' are listed under leading indicators.