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Homework answers / question archive / What is a business cycle? a) It is a firm's pattern of sales during a given year
What is a business cycle?
a) It is a firm's pattern of sales during a given year.
b) It is the economy's pattern of fluctuations in economic activity: expansion followed by contraction and then by another expansion.
c) It is the seasonal pattern of fluctuations in consumer spending: increased spending during the holiday season and decreased spending at other times of the year.
d) It refers to the peaks and troughs in the demand for luxury goods in a country.
The correct answer to the given question is option b) It is the economy's pattern of fluctuations in economic activity: expansion followed by contraction and then by another expansion.
The business cycle is the repetition of two prominent phases in a given economy, namely, expansion or boom and contraction or recession. An increase in the gross domestic product (GDP) or output and the employment rate usually occurs during an expansion. Such phase is usually followed by a contraction phase where the gross domestic product or the output and the unemployment rate decreases.
