CBE Business Cycles and Economic Indicators

Question 1

Which phase of the business cycle is characterized by peak economic activity, low unemployment, and high consumer spending followed by a turning point?

Accepted Answer

Peak

Answer

Trough

Answer

Expansion

Answer

Contraction

Question 2

The National Bureau of Economic Research (NBER) defines a recession as:

Accepted Answer

A significant decline in economic activity lasting more than a few months, visible across multiple sectors

Answer

Two consecutive quarters of negative GDP growth

Answer

A 10% or greater drop in the stock market

Answer

An unemployment rate exceeding 7% for two quarters

Question 3

Which economist is most associated with the theory that business cycles are driven by waves of technological innovation and creative destruction?

Accepted Answer

Joseph Schumpeter

Answer

John Maynard Keynes

Answer

Milton Friedman

Answer

Paul Samuelson

Question 4

During the contraction phase of a business cycle, which set of conditions typically occurs?

Accepted Answer

Declining output, rising unemployment, and reduced consumer spending

Answer

Rising employment and increasing consumer confidence

Answer

Increasing business investment and inventory buildup

Answer

Accelerating inflation and tightening credit conditions only

Question 5

The Kitchin cycle, with an approximate period of 3–5 years, is primarily associated with which economic driver?

Accepted Answer

Inventory adjustments by businesses

Answer

Major infrastructure investment spending

Answer

Long-wave technological innovation

Answer

Construction industry fluctuations

Question 6

Which of the following is classified as a leading economic indicator?

Accepted Answer

Building permits issued for new private housing

Answer

The unemployment rate

Answer

Industrial production index

Answer

Per capita personal income

Question 7

The 'output gap' is defined as:

Accepted Answer

The difference between actual GDP and potential GDP

Answer

The difference between total exports and total imports

Answer

The gap between corporate revenues and total production costs

Answer

The difference between nominal GDP and real GDP