This quiz works best with JavaScript enabled. Home > Economics > Macroeconomics > Cycles > Business Cycles – Quiz 5 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Business Cycles Quiz 5 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. When GDP rises faster than the long-run trend the economy is experiencing- A) Recession. B) Expansion. C) Recovery. D) None of above. Show Answer Correct Answer: B) Expansion. 2. Inflation is the highest in which of the following phases? A) Trough. B) Recession. C) Expansion. D) Peak. Show Answer Correct Answer: D) Peak. 3. Inflationary pressures are highest in the ..... stage of the business cycle. A) Mid. B) Recession. C) Late. D) Early. Show Answer Correct Answer: C) Late. 4. Read the following headline and choose the condition that correspond with the business cycle.GDP declines for four consecutive months, causing the Federal Reserve to lower interest rates. A) Trough. B) Contractionary. C) Growth. D) Peak. Show Answer Correct Answer: B) Contractionary. 5. One of the most important tools used to measure the health of an economy is A) Inflations. B) Supply and demand. C) Equilibrium. D) Gross Domestic Product. Show Answer Correct Answer: D) Gross Domestic Product. 6. What is the formula for calculating GDP if using the income approach? A) Consumption + investment + government spending + net exports. B) Wages + interest + rent + profit. C) Add up all values added to the good. D) None of these. Show Answer Correct Answer: B) Wages + interest + rent + profit. 7. What is the lowest level of a recession? A) Resolution. B) Peak. C) Pit. D) Trough. Show Answer Correct Answer: D) Trough. 8. Real GDP is obtained by A) Nominal GDP multiplied by price level. B) Nominal GDP divided by GDP deflator multiplied by 100. C) Nominal GDP minus GDP deflator. D) Nominal GDP divided by CPI. Show Answer Correct Answer: B) Nominal GDP divided by GDP deflator multiplied by 100. 9. What are both nominal and real GDP used for? A) Explaining the national budget to citizens. B) Showing the public how taxes affect the nation. C) Comparing our economy to the economies of other countries. D) Comparing the result of expenditures and income. Show Answer Correct Answer: D) Comparing the result of expenditures and income. 10. Who first identified cyclical patterns in the economy and created what is often referred to as "the business cycle" ? A) Steve Jobs. B) Clemente Juglar. C) Warren Buffett. D) George Washington. Show Answer Correct Answer: B) Clemente Juglar. 11. Where would you most likely find the highest rates of inflation A) Depression. B) Recession. C) Recovery. D) Peak. Show Answer Correct Answer: D) Peak. 12. Seth is laid off from work because he is a life guard at the local water park. He is experiencing what kind of unemployment? A) Seasonal. B) Structural. C) Frictional. D) Cyclical. Show Answer Correct Answer: A) Seasonal. 13. The unemployment rate equals the number of persons: A) Unemployed divided by the number employed. B) Unemployed divided by the number in the labor force. C) Unemployed divided by the population age 16 and over. D) Not working divided by the population age 16 and over. Show Answer Correct Answer: B) Unemployed divided by the number in the labor force. 14. If unemployment is high, how will the economy be affected? A) Business investments will increase. B) Government spending will decrease. C) Consumer spending will decrease. D) Consumer spending will increase. Show Answer Correct Answer: C) Consumer spending will decrease. 15. Which of the following can lead to a "bust" or downfall 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. This inflation results from an inefficient market or structure of the economy. A) Cost push inflation. B) Demand pull inflation. C) Divisional inflation. D) Structural inflation. Show Answer Correct Answer: D) Structural inflation. 17. In the contraction phase, businesses will: A) Notice that things are getting busier. B) Be buying new equipment. C) Be hiring more staff. D) Notice that things are slowing down a bit. Show Answer Correct Answer: D) Notice that things are slowing down a bit. 18. During the expansion-phase, people will: A) Earn more and consume more. B) Buy new goods for their house. C) Eat out more. D) All of these. Show Answer Correct Answer: D) All of these. 19. Low unemployment, an increase in the output of goods and services, and increasing consumer spending best illustrates which of the following periods of the business cycle? A) Expansion. B) Trough. C) Peak. D) Recession. Show Answer Correct Answer: A) Expansion. 20. The trade in exotic animals being illegally sold as pets is a multi-billion-dollar-a-year industry. Is this included in GDP? A) Yes-Government Spending. B) No-Underground Economy. C) No-Non-market activity. D) Yes-Consumer spending. Show Answer Correct Answer: B) No-Underground Economy. 21. Inflation Rate = A) PPI X CPI / 100. B) CPI of Base Year-CPI of Current Year/CPI of Current Year X 100. C) CPI Current Year-CPI of Previous Year/CPI of Previous Year X 100. D) PPI / CPI X 100. Show Answer Correct Answer: C) CPI Current Year-CPI of Previous Year/CPI of Previous Year X 100. 22. What type of Unemployment is represented here?Scenario:You are let go from Ritas because the Spring and Summer seasons have passed. A) Structural. B) Frictional. C) Seasonal. D) Cyclical. Show Answer Correct Answer: C) Seasonal. 23. When using the expenditure approach to calculate GDP, which of the following gets excluded? A) Business investment spending. B) Consumer spending. C) Imports. D) Government spending. Show Answer Correct Answer: C) Imports. 24. Read the following headline and choose the condition that correspond with the business cycle.Due to increased consumer spending, the Federal Reserve raises interest rates to slow the economy down. A) Growth. B) Trough. C) Contractionary. D) Peak. Show Answer Correct Answer: D) Peak. 25. In real business cycle models and new classical models A) Monetary factors are responsible for fluctuations in output and employment. B) Changes in unemployment are involuntary. C) Markets always clear. D) Prices and wages are perfectly flexible. Show Answer Correct Answer: D) Prices and wages are perfectly flexible. 26. Nick quits his job at Topps in order to find a better job. What type of unemployment is this? A) Cyclical. B) Frictional. C) Structural. D) None of above. Show Answer Correct Answer: B) Frictional. 27. What term is used to describe an increase in the general price level? A) Deflation. B) Stagnation. C) Inflation. D) Monetary policy. Show Answer Correct Answer: C) Inflation. 28. When an economy is in the contraction (recession) phase of the business cycle the government will likely A) Increase government spending to stimulate economic growth. B) Increase investment in training programs to assist unemployed people to find work. C) Both a & b. D) None of above. Show Answer Correct Answer: C) Both a & b. 29. CPI index for 2016 and 2017 was 125 and 120 respectively. Based on the information provided, between 2016 and 2017 A) Price increased by 5%. B) Price decreased by 5%. C) Price increased by 4%. D) Price decreased by 4%. Show Answer Correct Answer: D) Price decreased by 4%. 30. Caused by the increases in the expenses of production without the corresponding increase in output. A) Cost push inflation. B) Demand pull inflation. C) Divisional inflation. D) Structural inflation. Show Answer Correct Answer: B) Demand pull inflation. ← PreviousNext →Related QuizzesMacroeconomics QuizzesEconomics QuizzesBusiness Cycles Quiz 1Business Cycles Quiz 2Business Cycles Quiz 3Business Cycles Quiz 4Business Cycles Quiz 6Business Cycles Quiz 7Business Cycles Quiz 8Business Cycles Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books