CA Foundation · Business Economics · Business Cycles
Which of the following is a recognised characteristic of business cycles as described in Business Economics?
Business cycles are recurrent fluctuations in aggregate economic activity, but they vary in duration and intensity. They are not periodic at fixed intervals, they spread across many sectors of the economy, and they are mainly a feature of market-based industrial economies, not just agricultural ones.
- AThey are periodic and recur at fixed, exactly predictable intervals of equal length
- BThey affect only the industry in which a downturn originates and never spread to others
- CThey are recurrent fluctuations in aggregate economic activity, though their duration and intensity vary from cycle to cycleCorrect
- DThey occur only in agricultural economies that depend on the monsoon
Explanation
Business cycles are recurrent but not strictly periodic: the length and severity of each cycle differ. Option A is wrong because the cycles do not follow a fixed, predictable length. Option B is wrong because fluctuations spread across sectors. Option D is wrong because cycles occur mainly in market-oriented industrial economies.
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