CA Foundation · Business Economics · Business Cycles
Which of the following is a feature of business cycles that distinguishes them from seasonal variations and long-term trends?
Business cycles are recurring expansions and contractions in overall economic activity that stretch over several years. This separates them from seasonal swings, which repeat within a year, and from long-term trends, which reflect gradual growth over decades.
- ACycles involve recurring expansions and contractions in aggregate economic activity over several years, not within one yearCorrect
- BCycles repeat within one year because of festivals and weather
- CCycles represent a steady rise in output over several decades
- DCycles refer to one-time fall in output caused by a natural disaster
Explanation
Business cycles are recurring ups and downs in overall activity that last over several years. Seasonal variations repeat within a year, and long-term trends show gradual growth over decades. A one-off disaster-driven fall is not a recurring cycle.
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