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CA Foundation · Business Economics · Business Cycles

Which of the following is a feature that distinguishes a business cycle from a seasonal variation?

A business cycle is an economy-wide fluctuation in output, employment and income that unfolds over several years and is irregular in length, whereas seasonal variation is a calendar-linked pattern within a year, such as festival-season demand. This difference in scope and timing separates the two ideas.

  1. AA business cycle repeats within each calendar year at a fixed time
  2. BA business cycle involves economy-wide movements in output, employment and income over several years, while seasonal variation is a within-year pattern tied to the calendarCorrect
  3. CA business cycle affects only the prices of agricultural goods
  4. DA business cycle is caused solely by festivals and weather

Explanation

Seasonal variations repeat within a year at the same time, such as higher sales during Diwali. Business cycles span multiple years, are irregular in length, and move aggregate output, employment and income. The other options confuse the two concepts.

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