(a) the ups and downs in production of
commodities
(b) the fluctuating levels of economic activity
over a period of time
(c) decline in economic activities over
prolonged period of time
(d) increasing unemployment rate and
diminishing rate of savings
Answer:- The fluctuating level of economic activity over a period of time
2. When does an economic expansion occur in the business cycle?
(a) At the peak of the business cycle
(b) At the trough of the business cycle
(c) Between the peak and trough
(d) Between the trough and peak
Answer:- Between the trough and peak
3. Increasing Prosperity and High standards of living are the characteristics of
(a) Peak
(b) Contraction
(c) Expansion
( d ) Trough
Answer:- expansion
4. The end of expansion is termed as —
(a) Peak
(b) Contraction
(c) Trough
( d ) None of the above
Answer:- Peak
5. The beginning of recession is
(a) Peak
( b ) Trough
(c) Contraction
( d ) Expansion
Answer:- Contraction
6. A significant decline in general economic activity extending over a period of time is
(a) business cycle
(b) contraction phase
(c) recession
(d) recovery
Answer:- recession
7. Severe form of recession is
(a) Contraction
(b) Depression
(c) Expansion
(d) Peak
Answer:- Depression
8. The trough of a business cycle occurs when ________hits its lowest point.
(a) inflation in the economy
(b) the money supply
(c) aggregate economic activity
(d) the unemployment rate
Answer:- aggregate economic activity
9. The lowest point in the business cycle is referred to as the
(a) Expansion.
(b) Boom.
(c) Peak.
(d) Trough.
Answer:- Trough
10. Even with lower rate of interest, demand for credit declines in
(a) Expansion Phase
(b) Peak
(c) Contraction Phase
(d) Depression
Answer:- Depression
11. Which of the following statements is true?
(a) An Economy grows endlessly
(b) An Economy Contracts endlessly
(c) It is easy to predict turning points of
Business Cycle
(d) None of the above
Answer:- None of the above
12. Which of the following statement is not correct?
(a) Business Cycles are periodical
(b) Business Cycles are regular
(c) Business Cycles vary in intensity
(d) Business Cycles vary in length
Answer:- Business cycles are regular
13. A leading indicator is
(a) a variable that tends to move along
with the level of economic activity
(b) a variable that tends to move in
advance of aggregate economic activity
(c) a variable that tends to move consequent
on the level of aggregate economic
activity
(d) None of the above
Answer:- a variable that tends to move in advance of aggregate economic activity
14. A variable that tends to move later than aggregate economic activity is called
(a) a leading variable.
(b) a coincident variable.
(c) a lagging variable.
(d) a cyclical variable.
Answer:- a lagging variable
15. Changes in housing interest rate is a
(a) a leading indicator
(b) a coincident indicator
(c) a lagging indicator
(d) a cyclical indicator
Answer:- a leading indicator
16. Unemployment is a
(a) a leading indicator
(b) a coincident indicator
(c) a lagging indicator
(d) a cyclical indicator
Answer:- a lagging indicator
17. GDP is a
(a) a leading indicator
(b) a coincident indicator
(c) a lagging indicator
(d) a cyclical indicator
Answer:- a coincident indicator
18. Industries that are extremely sensitive to the business cycle are the
(a) Durable goods and service sectors.
(b) Non-durable goods and service
sectors.
(c) Capital goods and non-durable goods
sectors.
(d) Capital goods and durable goods
sectors.
Answer:- Non-durable goods and service sectors
19. A decrease in government spending would cause
(a) the aggregate demand curve to shift to
the right.
(b) the aggregate demand curve to shift to
the left.
(c) a movement down and to the right along
the aggregate demand curve.
(d) a movement up and to the left along
the aggregate demand curve.
Answer:- a movement up and to the left along the aggregate demand curve
20. Which of the following does not occur during an expansion?
(a) Consumer purchases of all types of
goods tend to increase.
(b) Employment increases as demand for
labour rises.
(c) Business profits and business confidence
tend to increase
(d) None of the above.
Answer:- None of the above
21. Which of the following best describes a typical business cycle?
(a) Economic expansions are followed by
economic contractions.
(b) Inflation is followed by rising income
and unemployment.
(c) Economic expansions are followed by
economic growth and development.
(d) Stagflation is followed by inflationary
economic growth.
Answer:- Economic expansion are followed by economic contraction
22. During recession, the unemployment rate __________ and output________
(a) Rises; falls
(b) Rises; rises
(c) Falls; rises
(d) Falls; falls
Answer:- Rise: Falls
23. The four phases of the business cycle are
(a) peak, recession, trough, and boom
(b) peak, depression, trough, and boom
(c) peak, recession, trough, and
recovery
(d) peak, depression, bust, and boom
Answer:- Peak, recession, trough and recovery
24. Leading economic indicators
(a) are used to forecast probable shifts in
economic policies
(b) are generally used to forecast
economic fluctuations
(c) are indicators of stock prices existing
in an economy
(d) are indicators of probable recession
and depression
Answer:- are generally used to forecast economic fluctuation
25. When aggregate economic activity is declining, the economy is said to be in
(a) Contraction.
(b) an expansion.
(c) a trough.
(d) a turning point.
Answer:- Contraction
26. 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:- Turning points
27. The most probable outcome of an increase in the money supply is
(a) interest rates to rise, investment spending
to rise, and aggregate demand to rise
(b) interest rates to rise, investment spending
to fall, and aggregate demand to fall
(c) interest rates to fall, investment spending
to rise, and aggregate demand to rise
(d) interest rates to fall, investment spending
to fall, and aggregate demand to fall
Answer:- interest rates to fall, ivestment spending to rise, and aggregate demand to rise
28. Which of the following is not a characteristic of business cycles
(a) Business cycles have serious
consequences on the well-being of the
society.
(b) Business cycles occur periodically,
although they do not exhibit the same
regularity.
(c) Business cycles have uniform
characteristics and causes.
(d) Business cycles arecontagious and
unpredictable.
Answer:- Business cycles have a uniform characteristics and causes
29. Economic recession shares all of these characteristics except.
(a) Fall in the levels of investment,
employment
(b) Incomes of wage and interest earners
gradually decline resulting in decreased
demand for goods and services
(c) Investor confidence is adversely affected
and new investments may not be
forthcoming
(d) Increase in the price of inputs due to
increased demand for inputs
Answer:- Increase in the price of inputs due to increased demand for inputs
30. The different phases of a business cycle
(a) Do not have the same length and
severity
(b) expansion phase always last more than
ten years
(c) last many years and are difficult to get
over in short periods
(
d) None of the above
Answer:- Do not have the same length and severity
31. Which of the following is not an example of coincident indicator?
(a) Industrial production
(b) inflation
(c) Retail sales
(d) New orders for plant and equipment
Answer:- New orders for plants and equipments
32. According to _________ trade cycle occurs due to onset of innovations.
a) Hawtrey
(b) Adam Smith
c) J M Keynes
d) Schum peter
Answer:- Schum peter
33. According to Keynes, Fluctuations activity are due to fluctuations in
a) aggregate effective demand
b) Price
c) Supply of resources
d) None of the above
Answer:- None of the above
PREVIOUS YEAR MCQs
1. Economic fluctuations occur again & again but not at _____ intervals, nor are they of the _______ length:
a) Same ; Same
b) Regular; Same
c) Irregular; Different
d) None of the above
Answer:- Regular, Same
2. As production & employment expand, economy________:
a) Gradually decreases
b) Gets destructed
c) Revives
d) All of the above
Answer:- Revives
3. The state of expansion continues till there is _______ of resources:
a) Full employment
b) Under utilisation
c) Scarcity
d) None of the above
Answer:- Full Employment
4. High level of consumer spending, business confidence, production, factor incomes. profit & investment exhibit phase as _______:
a) Peak
b) Expansion
c) Contraction
d) Trough
Answer:- Expansion
5. The end of expansion & when economic growth has reached a point where it will stabilise for a short period is known as :
a) Peak
b) Expansion
c) Contraction
d) Both a& b
Answer:- Peak
6. “Producers being aware of the fact that they have indulged in excessive investment & over production respond by holding back future investment plans, cancellation of orders etc.” are known as _____:
a) Peak
b) Expansion
c) Contraction
d) Trough
Answer:- Contraction
7. When discrepancy between demand & supply get widened further, we get____:
a) Trough
b) Depression
c) Contraction
d) None
Answer:- Contraction
8. When growth rate becomes negative & the level of National Income & expenditure declines rapidly we observe_____:
a) Recovery
b) Expansion
c) Trough
d) Both a & b
Answer:- Trough
9. The economy cannot continue to contract endlessly, it will go for_____:
a) Recovery
b) Boom
c) Peak
d) Trough’
Answer:- Recovery
10. Expansion is characterised by:
a) Increase in national output
b) Upswing of Trade Cycle
c) Downswing of Trade Cycle
d) Both a and b
Answer:- Both a and b
11. Peak or Boom refers to:
(a) Lowest of Trade Cycle
(b) Turning Point of Trade Cycle
(c) Middle point of Trade Cycle
(d) None of the above
Answer:- Turning point of Trade Cycles
12. Contraction is characterised by:
(a) Decrease in national output
(b) Downswing of Trade Cycle
(c) Upswing of Trade Cycle
(d) Both a and b
Answer:- Both a and b
13. Depression occurs when:
(a) Process of recession on its way
(b) Process of recession is complete
(c) Severe contraction in economic activities
(d) Both b & c
Answer:- Both b and c
14. Economists use changes in variety of activities to measure Business Cycle, which are called
(a) Variables
(b) Parameters
(c) Indicators
(d) All
Answer:- Indicators
15. Variables that change after real output changes are called:
(a) Lagging variables
(b) Lagging indicators
(c) Lagging parameters
(d) All
Answer:- Lagging indicator
16. According to Keynes, fluctuations in economic activities are due to fluctuations in aggregate _________
a) Market Demand
b) Effective Demand
c) Volatile Demand
d) None
Answer:- Effective Demand
17. According to Hawtrey, Trade Cycle is purely ________ phenomenon.
(a) Fiscal
(b) Monetary
(c) Business
(d) All
Answer:- Monetary
18. Macroeconomic policies which causes Business Cycle are:
(a) Price and market policies
(b) Monetary and fiscal policies
(c) Business policies
(d) All
Answer:- Monetary and fiscal policies
19. According to Professor __________ modern business activities are based on anticipating of business community and are affected by waves of optimism or pessimism
(a) Samuelson
(b) Marshall
(c) Hicks
d) Pigou
Answer:- Pigou
20. According to Professor __________ Trade Cycles occur as a result of innovations which take place in the system from time to time:
(a) Samuelson
(b) Marshall
(c) Schumpeter
(d) Allen
Answer:- Schumpeter
21. The term business cycle refers:
(a) The ups and downs in production of commodities
(b) The fluctuating levels of economic activity over a time period
(c) Decline in economic activities over a prolonged period of time
(d) Increasing unemployment rate and diminishing rate of savings
Answer:- The fluctuating level of economic activity over a time period
22. When aggregate activity is declining the economy is said to be in:
(a) Contraction
(b) Expansion
(c) Trough
(d) Turning point
Answer:- Contraction
23. During recession unemployment rate _______ and output _______
(a) Rises, falls
(b) Rises, rises
(c) Falls, rises
(d) Falls, falls
Answer:- Rises, falls
24. Peaks and troughs of business cycle are known collectively as:
(a) Volatility
(b) Turning points
(c) Equilibrium points
(d) None
Answer:- Turning points
25. Rampant unemployment is found in:
(a) Boom
(b) Recovery
(c) Contraction
(d) Depression
Answer:- Depression
26. Greatest depression suffered by economy in:
(a) 1924
(b) 1930
(c) 1945
(d) 2008
Answer:- 1930
27. Last stage of recession is called:
(a) Depression
(b) Recovery
(c) Shutdown
d) All
Answer:- Depression
28. In the long run, a reduction in labour supply would cause output _________ and ________ the aggregate price level.
(a) Fall, rise
(b) Fall, fall
(c) Rise, fall
(d) Rise, rise
Answer:- Fall, Rise
29. Which of the following macro-Economic variable would you include in an index of leading economic indicators.
(a) Employment
(b) Inflation
(c) Real interest rate
(d) Residential investment
Answer:- Residental Investment
30. An economic variable that moves in the opposite direction as aggregate economic activity down in expansions, up in contractions is called:
(a) Pro cyclical
(b) Counter cyclical
(c) Cyclical
(d) A leading variable
Answer:- Counter cylical
31. Business cycle is contagious and ________ in character.
(a) Local
(b) Regional
(c) National
(d) International
Answer:- International
32. Which external factor affects business cycle:
(a) Population growth
(b) Variation in government supply
(c) Money supply
(d) Macro Economic policies
Answer:- Variation in governemtn supply
33. Which internal factor affect the business cycle:
(a) Fluctuations in investment
(b) Natural factor
(c) Technology shocks
(d) Population growth
Answer:- Fluctuation in investment
34. Fashion retailer is known as:
(a) Cyclical business
(b) Sunrise business
(c) Sluggish business
(d) None
Answer:- Cyclical business
35. Features of business cycle include:
(a) Discuss periodically
(b) Have 4 different phases
(c) Originate in free market economy
(d) All
Answer:- All
36. Internal causes of depression include:
(a) Fluctuating in investment
(b) Money supply
(c) Psychological factors
(d) All
Answer:- All
37. Whose statement out of these is false ?
(a) Hawtrey - “ Trade cycle is purely monetary phenomenon
(b) Keynes - “ Fluctuations in aggregate demand
(c) Pigou - “Fluctuations in investment
(d) Schumpeter – “Innovations”
Answer:- Pigou .."Fluctuation in invesment
38. Technology shocks is one of the ______ causes of Business Cycle:
(a) Internal
(b) External
(c) Psychological
(d) All
Answer:- External
39. Change in money supply is one of the ______ causes of Business Cycle:
(a) Internal
(b) External
(c) Psychological
(d) All
Answer:- Internal
40. Business managers need to work effectively to arrive at sound strategic decisions in complex times across the _______ ______, managing through four phases:
(a) Trade Cycle
(b) Business Cycle
(c) Both a & b
(d) None
Answer:- Both a and b
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