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Trade Cycle Solved MCQs

in Business Economics Macro

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Chapter: Trade Cycle

1.	The trough of a business cycle occurs when _____ hits its lowest point.
A.	inflation
B.	the money supply
C.	aggregate economic activity
D.	the unemployment rate
Answer» C. aggregate economic activity

2.	The low point in the business cycle is referred to as the
A.	expansion.
B.	boom.
C.	trough.
D.	peak.
Answer» C. trough.

3.	When aggregate economic activity is increasing, the economy is said to be in
A.	an expansion.
B.	a contraction.
C.	a peak.
D.	a turning point.
Answer» A. an expansion.

4.	In a boom:
A.	Unemployment is likely to fall
B.	Prices are likely to fall
C.	Demand is likely to fall
D.	Imports are likely to fall
Answer» A. Unemployment is likely to fall

5.	Peaks and troughs of the business cycle are known collectively as
A.	volatility.
B.	turning points.
C.	equilibrium points.
D.	real business cycle events.
Answer» B. turning points.

6.	When aggregate economic activity is declining, the economy is said to be in
A.	a contraction.
B.	an expansion.
C.	a trough.
D.	a turning point.
Answer» A. a contraction.

7.	Industries that are extremely sensitive to the business cycle are the
A.	durable goods and service sectors.
B.	nondurable goods and service sectors.
C.	capital goods and nondurable goods sectors.
D.	capital goods and durable goods sectors.
Answer» D. capital goods and durable goods sectors.

8.	Economists use the term shocks to mean
A.	unexpected government actions that affect the economy.
B.	typically, unpredictable forces that have major impacts on the economy.
C.	sudden rises in oil prices.
D.	the business cycles.
Answer» B. typically, unpredictable forces that have major impacts on the economy.

9.	Primarily, macroeconomists use microeconomic principles to study
A.	business cycles and trends in the stock market.
B.	long-run economic growth and antitrust policies.
C.	trends in the stock market and long-term economic growth.
D.	long-run economic growth and business cycles.
Answer» D. long-run economic growth and business cycles.

10.	The two most important American business cycle events of the twentieth century were
A.	the Great Depression and stagflation.
B.	World War II and the Great Depression.
C.	the productivity slowdown and the Great Depression.
D.	government budget deficits and World War II.
Answer» B. World War II and the Great Depression.

11.	According to real business cycle theory, the primary causes of business cycles are
A.	shocks to aggregate demand.
B.	monetary factors.
C.	technology shocks.
D.	waves of self-fulfilling optimism and pessimism.
Answer» C. technology shocks.

12.	The macroeconomic models that are most supportive of the role of government policy aimed at smoothing business cycles are
A.	real business cycle models.
B.	endogenous growth models.
C.	Keynesian models.
D.	growth models.
Answer» C. Keynesian models.

13.	Business cycles are
A.	each unique, but all have a single cause.
B.	each unique and they can have many causes.
C.	similar, and they all have a single cause.
D.	similar, but they can have many causes.
Answer» D. similar, but they can have many causes.

14.	In the long run, inflation is caused by
A.	aggressive labour unions.
B.	greedy monopolists.
C.	growth in the money supply.
D.	global warming.
Answer» C. growth in the money supply.

15.	in order to influence spending on goods and services in the short-run, monetary policy is directed at directly influencing...
A.	unemployment rates.
B.	inflation rates.
C.	interest rates.
D.	economic growth rates.
Answer» B. inflation rates.

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