Business Cycle

Which of the following best describes a 'peak' in the business cycle?

• The economy is at its lowest level of activity
• Inflation and unemployment are both low
• The economy is at its highest level of output before slowing down
• Government intervention is at its highest

What phase of the business cycle typically follows a peak?

• Upturn

• Trough
• Recovery
• Downturn

During an economic upturn, which of the following is most likely to occur?

• Unemployment increases
• Consumer spending decreases
• Businesses invest more
• Inflation decreases

Which of the following is NOT a typical characteristic of a recession?

• Increased consumer confidence
• Rising unemployment
• Falling real GDP
• Reduced investment

What is the lowest point in the business cycle called?

• Trough
• Recession
• Depression
• Deflation

During the recovery phase, which trend is commonly observed?

• Falling GDP
• Rising unemployment
• Decreasing consumer demand
• Increasing economic activity

Which of the following would most likely occur during a peak/boom?

• Increased unemployment
• Lower production levels
• Higher wages and profits
• Reduced consumer confidence

Which indicator most directly signals the beginning of a downturn?

• Rising inflation
• Falling investment and declining GDP
• Decreasing interest rates
• Higher public spending

Governments often respond to a recession by:

• Raising interest rates
• Cutting public spending
• Increasing taxes
• Increasing government expenditure

During an economic downturn, businesses typically:

• Hire more workers
• Increase capital investment
• Reduce production and cut costs
• Raise prices