Fill in the blanks: A recession is characterized by ___ in economic activity and ___ in unemployment rates.

Decline; rise

True or False: The peak phase of the business cycle is when economic growth is at its lowest point.

False; the peak phase represents the highest point of economic growth.

What distinguishes leading indicators from lagging indicators in economic forecasting?

Leading indicators predict economic trends.

• Change before economic shifts.

• Reflect future economic activity.

• Help in proactive decision-making.

Fill in the blank: The lowest point of the business cycle, where economic activity is at its minimum, is called the ___.

Trough

Describe how consumer behavior typically changes during a recession.

During a recession, consumer confidence declines, leading to reduced spending and increased caution regarding financial commitments.

What are the implications of technological advancements on business cycles?

Technological advancements impact business cycles.

• Boosts productivity and growth.

• Requires new investments.

• Increases employment and income.

Fill in the blank: A significant increase in demand during the business cycle often leads to ___ in production and ___ in unemployment.

Growth; decrease

True or False: Economic recessions are characterized by rising profits for businesses.

False; recessions typically lead to decreased business profits due to reduced sales and production.

What role does government spending play in influencing business cycles?

Government spending impacts business cycles.

• Stimulates economic activity.

• Influences aggregate demand.

• Affects overall economic conditions.

Describe the effects of a depression on employment and income levels.

Depression lowers employment and income levels.

• High unemployment rates occur.

• Companies cut jobs to save costs.

• Individuals face reduced income.

Fill in the blank: The ___ phase of the business cycle marks a transition from contraction to expansion.

Recovery

What are some common external factors that can lead to business cycle fluctuations?

External factors include wars, post-war reconstruction, technology shocks, natural factors, and global interconnectedness affecting trade.