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The business cycle is the downward and upward fluctuations of gross domestic product (GDP). Consider the following statements regarding the boom phase of the business cycle:
1. There is a decrease in the inflation
2. Increase in the unemployment
3. Consumer spending increases
1. There is a decrease in the inflation
2. Increase in the unemployment
3. Consumer spending increases
Q. Which of the above takes place during the boom phase of the business cycle?
- a)1 and 2 only
- b)1 and 3 only
- c)3 only
- d)1, 2 and 3
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
The business cycle is the downward and upward fluctuations of gross do...
The term "business cycle" refers to economy-wide fluctuations in production, trade, and general economic activity. From a conceptual perspective, the business cycle is the upward and downward movements of levels of GDP (gross domestic product) and refers to the period of expansions and contractions in the level of economic activities around a iong-term growth trend.
An economic boom is the expansion and peak phases of the business cycle. It's also known as an upswing, upturn, and a growth period. During a boom, key economic indicators will rise like:
An economic boom is the expansion and peak phases of the business cycle. It's also known as an upswing, upturn, and a growth period. During a boom, key economic indicators will rise like:
- In the boom phase, strong consumer demand is the leading force. Families are confident about the future, so they buy more now. They know they'll get better jobs, and their home values and investments will increase in value. This demand means companies have to boost supply, which they do by hiring new workers. Capital is easily available, so consumers and businesses alike can borrow at low rates. That stimulates more demand, creating a virtuous circle of prosperity. So, option 3 is correct.
- If overall spending is growing rapidly enough, unemployment can be temporarily pushed below the natural rate. So, option 2 is not correct.
- If demand outstrips supply, the economy can overheat. Also, if there's too much capital chasing too few goods, it causes inflation. When this happens, investors and businesses try to outperform the market. They ignore the risk of bad investments to achieve gain. So, option 1 is not correct.
Therefore, the correct answer is (c).
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The business cycle is the downward and upward fluctuations of gross domestic product (GDP). Consider the following statements regarding the boom phase of the business cycle:1. There is a decrease in the inflation2. Increase in the unemployment3. Consumer spending increasesQ. Which of the above takes place during the boom phase of the business cycle?a)1 and 2 onlyb)1 and 3 onlyc)3 onlyd)1, 2 and 3Correct answer is option 'C'. Can you explain this answer?
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The business cycle is the downward and upward fluctuations of gross domestic product (GDP). Consider the following statements regarding the boom phase of the business cycle:1. There is a decrease in the inflation2. Increase in the unemployment3. Consumer spending increasesQ. Which of the above takes place during the boom phase of the business cycle?a)1 and 2 onlyb)1 and 3 onlyc)3 onlyd)1, 2 and 3Correct answer is option 'C'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about The business cycle is the downward and upward fluctuations of gross domestic product (GDP). Consider the following statements regarding the boom phase of the business cycle:1. There is a decrease in the inflation2. Increase in the unemployment3. Consumer spending increasesQ. Which of the above takes place during the boom phase of the business cycle?a)1 and 2 onlyb)1 and 3 onlyc)3 onlyd)1, 2 and 3Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The business cycle is the downward and upward fluctuations of gross domestic product (GDP). Consider the following statements regarding the boom phase of the business cycle:1. There is a decrease in the inflation2. Increase in the unemployment3. Consumer spending increasesQ. Which of the above takes place during the boom phase of the business cycle?a)1 and 2 onlyb)1 and 3 onlyc)3 onlyd)1, 2 and 3Correct answer is option 'C'. Can you explain this answer?.
The business cycle is the downward and upward fluctuations of gross domestic product (GDP). Consider the following statements regarding the boom phase of the business cycle:1. There is a decrease in the inflation2. Increase in the unemployment3. Consumer spending increasesQ. Which of the above takes place during the boom phase of the business cycle?a)1 and 2 onlyb)1 and 3 onlyc)3 onlyd)1, 2 and 3Correct answer is option 'C'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about The business cycle is the downward and upward fluctuations of gross domestic product (GDP). Consider the following statements regarding the boom phase of the business cycle:1. There is a decrease in the inflation2. Increase in the unemployment3. Consumer spending increasesQ. Which of the above takes place during the boom phase of the business cycle?a)1 and 2 onlyb)1 and 3 onlyc)3 onlyd)1, 2 and 3Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The business cycle is the downward and upward fluctuations of gross domestic product (GDP). Consider the following statements regarding the boom phase of the business cycle:1. There is a decrease in the inflation2. Increase in the unemployment3. Consumer spending increasesQ. Which of the above takes place during the boom phase of the business cycle?a)1 and 2 onlyb)1 and 3 onlyc)3 onlyd)1, 2 and 3Correct answer is option 'C'. Can you explain this answer?.
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The business cycle is the downward and upward fluctuations of gross domestic product (GDP). Consider the following statements regarding the boom phase of the business cycle:1. There is a decrease in the inflation2. Increase in the unemployment3. Consumer spending increasesQ. Which of the above takes place during the boom phase of the business cycle?a)1 and 2 onlyb)1 and 3 onlyc)3 onlyd)1, 2 and 3Correct answer is option 'C'. Can you explain this answer?, a detailed solution for The business cycle is the downward and upward fluctuations of gross domestic product (GDP). Consider the following statements regarding the boom phase of the business cycle:1. There is a decrease in the inflation2. Increase in the unemployment3. Consumer spending increasesQ. Which of the above takes place during the boom phase of the business cycle?a)1 and 2 onlyb)1 and 3 onlyc)3 onlyd)1, 2 and 3Correct answer is option 'C'. Can you explain this answer? has been provided alongside types of The business cycle is the downward and upward fluctuations of gross domestic product (GDP). Consider the following statements regarding the boom phase of the business cycle:1. There is a decrease in the inflation2. Increase in the unemployment3. Consumer spending increasesQ. Which of the above takes place during the boom phase of the business cycle?a)1 and 2 onlyb)1 and 3 onlyc)3 onlyd)1, 2 and 3Correct answer is option 'C'. Can you explain this answer? theory, EduRev gives you an
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