Unit 12 - The Business Cycle

Question 1

Economics break the expansions phases into which two phases?

Answer 1

1. Recovery - the period of growth from the trough to the prior peak
2. Expansion - when the economy reaches the prior peak and continues to grow

Question 2

What are the four phases a business cycle goes through?

Answer 2

1. Expansion
2. Peak
3. Contraction
4. Trough

Question 3

The following characteristics are examples of which phase?

1. Increased consumer demand for goods and services
2. Increases in industrial production
3. Rising stock prices
4. Rising property values
5. Increasing GDP

Answer 3

Expansion

Question 4

The following characteristics are examples of which phase?

1. Very low unemployment
2. A slowdown in inflation
3. A slowing of GDP
4. Steady consumer demand

Answer 4

Peak

Question 5

The following characteristics are examples of which phase?

1. Rising numbers of bankruptcies and bond defaults
2. High consumer debt
3. Falling stock prices
4. Rising inventories
5. Decreasing GDP

Answer 5

Contraction

Question 6

The following characteristics are example of which phase?

1. A high unemployment
2. Flat GDP
3. Low inflation
4. Low, but not decreasing, consumer demand

Answer 6

Trough

Question 7

This is when the economy enter an extended period of contraction that continues for six months or longer

Answer 7

Recession

Question 8

If a contractions continues for 18 months, it is now called a

Answer 8

Depression

Question 9

_____ is more common during the expansion phase of the economy.

Answer 9

Inflation