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The Business Cycle Answers

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1
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Which stage of the business cycle is an economy in when it reaches its low point?

A
Expansion
B
Peak
C
Contraction
D
Trough
2
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There are five stages in a recession. 1. job loss2. falling production3. falling demand (occurs twice)4. peak production In which order do these stages occur?

4
4, 3, 2, 1, 3
3
3, 2, 1, 3, 4
4
4, 3, 2, 3, 1
4
4, 2, 3, 1, 3
3

best

C
Car dealerships have minimal overstock.
C
Car dealerships are not restocking.
C
Car dealerships cannot sell their stock.
C
Car dealerships cannot obtain stock.
4

Which of the following is a characteristic of prosperity in the peak phase of the business cycle?

s
stagnant prices
h
high levels of production
a
ambivalence about the economy
r
reduced incomes
5

Which event most likely explains renewed demand in a recovery period?

C
Consumers choose to save more and spend less.
E
Economic policy renews consumer confidence and demand.
P
Producers decrease prices to prompt demand and recovery.
P
Production decreases to prompt increased demand.
6

best

T
The recession enters a recovery period.
T
The recession slows.
T
The recession accelerates.
T
The recession starts and stops.
7

During a recession, what is one way governments try to encourage growth?

b
by increasing unemployment benefits
b
by stopping government spending
b
by requiring firms to maintain production
b
by eliminating all tax breaks
8

Read a passage from a speech given by President Barack Obama.Because of this plan, families who are struggling to pay tuition costs will receive a $2,500 tax credit . . . And Americans who have lost their jobs in this recession will be able to receive extended unemployment benefits.–President Barack Obama, February 4, 2009

A
It describes government measures to stimulate demand and bring about a recovery.
B
It describes government measures to increase production and bring about a depression.
C
It describes a shift in government policies during a trough on the business cycle.
D
It describes a shift in government policies during a peak on the business cycle.
9

Why might buying a home during a recession be a good decision for some consumers? Choose three answers.Housing prices are down.It is easier to get a mortgage.Less demand means more options for buyers.Less demand means less competition with other buyers.Fewer houses are on the market.

H
Housing prices are down.
I
It is easier to get a mortgage.
L
Less demand means more options for buyers.
L
Less demand means less competition with other buyers.
F
Fewer houses are on the market.
10

Which of the following conditions is most indicative of recovery?

A
The economy has stopped shrinking.
B
The economy begins to peak.
C
The GDP continues to shrink.
D
The economy is growing again.

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