This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Cycles > Business Cycles – Quiz 4 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Business Cycles Quiz 4 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What measures a nation's productivity and spending? A) Consumer Price Index. B) Producer Price Index. C) Gross Domestic Product. D) US, Mexico, Canada Agreement. Show Answer Correct Answer: C) Gross Domestic Product. 2. During an economic expansion A) GDP is decreasing and people are losing their jobs. B) GDP is increasing, businesses are expanding, and consumers are spending more. C) GDP is decreasing and businesses are selling less goods. D) None of the above. Show Answer Correct Answer: B) GDP is increasing, businesses are expanding, and consumers are spending more. 3. When a recession is predicted in an economy which of the following occurs? A) Consumers increase spending. B) Businesses increasing hiring. C) Businesses decrease investment. D) Businesses increase investment. Show Answer Correct Answer: C) Businesses decrease investment. 4. In the trough phase, workers will A) Be worried about losing their jobs and are avoiding spending money. B) Be booking their next overseas holiday. C) Be buying a new car. D) Be buying a bigger house. Show Answer Correct Answer: A) Be worried about losing their jobs and are avoiding spending money. 5. During the Spring, Ford Motor Company lays off workers for several weeks as they change over their plants for the new car models. The workers are considered A) Structural Unemployment. B) Frictional Unemployment. C) Cyclical Unemployment. D) Seasonal Unemployment. Show Answer Correct Answer: D) Seasonal Unemployment. 6. Which of the following is not a component of the business cycle? A) Expansion. B) Peak. C) Recession. D) Decline. Show Answer Correct Answer: D) Decline. 7. Declining unemployment rate A) Expansion. B) Peak. C) Trough. D) Contraction. Show Answer Correct Answer: A) Expansion. 8. When the economy is experiencing an unemployment rate between 3-5%, an economist would say the economy is A) At an unnatural rate. B) On the cusp of a recession. C) At full employment. D) Entering into inflation. Show Answer Correct Answer: C) At full employment. 9. At a peak, what is occurring in the economy? A) High unemployment, high inflation. B) Low unemployment, low inflation. C) Low unemployment, high inflation. D) High unemployment, low inflation. Show Answer Correct Answer: C) Low unemployment, high inflation. 10. An example of expansionary fiscal policy would be A) Cutting production of consumer goods. B) Cutting government spending. C) Cutting prices of consumer goods. D) Cutting taxes. Show Answer Correct Answer: D) Cutting taxes. 11. Which of the following statements are correct? In (the) A) Keynesian model, unemployment is voluntary. B) Real business cycle models, all unemployment is voluntary. C) New classical models, there is voluntary unemployment. D) Both b and c. Show Answer Correct Answer: D) Both b and c. 12. Which BEST describes productivity? A) The interaction of buyers and sellers. B) The relationship of inputs and outputs. C) Producing at high opportunity costs. D) Trading based on absolute advantage. Show Answer Correct Answer: B) The relationship of inputs and outputs. 13. If CPI goes from 100 to 300 and your salary goes from $ 100, 000 to $ 200, 000, what happened to your purchasing power? A) Increase. B) Decrease. C) No change. D) None of above. Show Answer Correct Answer: B) Decrease. 14. In which part of the GDP calculation does this fit?The US military spends $ 5 billion on five new helicopters. A) Government spending. B) Investment spending. C) Net exports. D) Consumer spending. Show Answer Correct Answer: A) Government spending. 15. Which of the following can lead to a "bust" in the business cycle? A) High inflation. B) Scarcity of resources. C) Both a & b. D) None of above. Show Answer Correct Answer: C) Both a & b. 16. Which of the following can lead to a recession in the business cycle? A) High inflation. B) Scarcity of resources. C) Both a & b. D) None of above. Show Answer Correct Answer: C) Both a & b. 17. If the unemployment rate is rising and GDP is falling, the fiscal policy action that the federal government should MOST likely follow is A) Decreasing taxes. B) Decreasing spending. C) Decreasing the reserve requirement. D) Decreasing the money supply. Show Answer Correct Answer: A) Decreasing taxes. 18. Who does Inflation hurt? A) People with a fixed income. B) Savers. C) Money Lenders at fixed interest rates. D) All of the above. Show Answer Correct Answer: D) All of the above. 19. What measures a nation's productivity? A) Gross Domestic Product. B) US, Mexico, Canada Agreement. C) Producer Price Index. D) Consumer Price Index. Show Answer Correct Answer: A) Gross Domestic Product. 20. What best describes a recession? A) Increase in consumer spending. B) Low unemployment. C) Increase in business productivity. D) High unemployment. Show Answer Correct Answer: D) High unemployment. 21. Read the following headline and choose the condition that correspond with the business cycle.The DOW Jones industrial average reaches an all-time high. A) Peak. B) Contractionary. C) Trough. D) Growth. Show Answer Correct Answer: A) Peak. 22. What economic model best represents the product and factor markets? A) Business Cycle. B) Circular Flow. C) Monopolistic Gerrymandering. D) Invisible Hand. Show Answer Correct Answer: B) Circular Flow. 23. The government agency that is responsible for calculating GDP is A) The Commerce Department. B) The Department of Defense. C) The Department of Transportation. D) None of the above. Show Answer Correct Answer: A) The Commerce Department. 24. During an economic contraction A) GDP is decreasing and people are losing their jobs. B) GDP is increasing and wages are increasing. C) GDP is decreasing and businesses are selling more goods. D) None of the above. Show Answer Correct Answer: A) GDP is decreasing and people are losing their jobs. 25. In any efficiency wage model, it must be true that A) The marginal benefit of increased efficiency is equal to the marginal cost of higher wages. B) Nominal wages are inflexible. C) Disequilibrium in the labor market exists. D) All of the above. Show Answer Correct Answer: D) All of the above. 26. Which stage is described as the following?The business idea is still an idea/concept. A) Growth. B) Start-up. C) Maturity. D) Seed. Show Answer Correct Answer: D) Seed. 27. In the mid phase of the business cycle, one should avoid investing the ..... sector. A) Consumer Staples. B) Industrials. C) Telecom. D) Materials. Show Answer Correct Answer: D) Materials. 28. Read the following headline and choose the condition that correspond with the business cycle.The sale of durable goods is down for the 5th consecutive month. A) Peak. B) Contractionary. C) Growth. D) Trough. Show Answer Correct Answer: D) Trough. 29. Which phase of the Business Cycle includes the economy slowing down? A) Recession. B) Expansion. C) Depression. D) Recovery. Show Answer Correct Answer: A) Recession. 30. Macroeconomics approaches the study of economics from the viewpoints of A) The entire economy. B) Individual firms. C) Government units. D) Individual consumers. Show Answer Correct Answer: A) The entire economy. ← PreviousNext →Related QuizzesMacroeconomics QuizzesEconomics QuizzesBusiness Cycles Quiz 1Business Cycles Quiz 2Business Cycles Quiz 3Business Cycles Quiz 5Business Cycles Quiz 6Business Cycles Quiz 7Business Cycles Quiz 8Business Cycles Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books