CA Foundation · Business Economics · Business Cycles
Which of the following statements about the duration and phases of business cycles is correct?
A complete business cycle has expansion, peak, contraction and trough phases, and its length and intensity differ from cycle to cycle. Cycles are therefore not identical in duration or amplitude, and the trough is the lowest point of activity, not the highest.
- AAll cycles have identical duration and amplitude
- BA complete cycle consists of expansion, peak, contraction and trough, and it varies in length from one cycle to anotherCorrect
- CA cycle consists only of a boom and a depression with no intermediate phase
- DThe trough is the phase of highest output in the cycle
Explanation
A complete cycle passes through expansion, peak, contraction (recession) and trough, and the time taken differs between cycles. Option A is wrong as duration and amplitude vary. Option C ignores the intermediate phases. Option D is wrong because the peak, not the trough, has the highest output.
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