AnswersOC27 Economics-2102310-Sem-MeadowsUnit Test

4.1 The Business Cycle Answers

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T
The recession enters a recovery period.
T
The recession slows.
T
The recession accelerates.
T
The recession starts and stops.
2
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Which of the following is a characteristic of prosperity in the peak phase of the business cycle?

s
stagnant prices
h
high levels of production
a
ambivalence about the economy
r
reduced incomes
3

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C
Car dealerships have minimal overstock.
C
Car dealerships are not restocking.
C
Car dealerships cannot sell their stock.
C
Car dealerships cannot obtain stock.
4

Which indicators do economists use to determine the state of the economy? Choose three answers.pricesimmigration levelsagricultural outputemployment levelsgross domestic product (GDP)

p
prices
i
immigration levels
a
agricultural output
e
employment levels
g
gross domestic product (GDP)
5

When production is very high but demand is very low, it can lead to

a
a recession.
a
a recovery.
p
prosperity.
t
the peak.
6

The graphs show the US unemployment rate and the price of whole milk between 2006 and 2012.

Question illustration
T
There is no link between prices and unemployment.
R
Rising unemployment rates drive prices higher.
F
Falling prices drive unemployment rates lower.
A
As unemployment rates rise, average prices fall.
7

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C
Consumers spend less, causing worker layoffs.
D
Demand falls, causing production to stay at its peak.
A
A recession begins, causing consumers to spend more.
G
Goods are overproduced, causing a surplus in jobs.
8

Which stage of the business cycle is an economy in when it reaches its low point?

A
Expansion
B
Peak
C
Contraction
D
Trough
9

This is a graph of the business cycle.Time is measured along the x-axis. What is measured along the y-axis?

Question illustration
A
employment levels
B
prices
C
economic output
D
demand
10

Which of the following conditions is most indicative of recovery?

A
The economy has stopped shrinking.
B
The economy begins to peak.
C
The GDP continues to shrink.
D
The economy is growing again.
11

There are four stages in an economic recovery. 1. increased production2. rising demand (occurs twice)3. increased hiring In which order do these stages occur?

A
2, 1, 2, 3
B
3, 2, 1, 2
C
2, 3, 1, 2
D
2, 1, 3, 2
12

Which best describes the nature of cause and effect in the context of the business cycle?

A
Consumers spend less, causing worker layoffs.
B
Demand falls, causing production to stay at its peak.
C
A recession begins, causing consumers to spend more.
D
Goods are overproduced, causing a surplus in jobs.
13

Which best describes what is represented in the business cycle model?

A
the interactions between producers and consumers
B
the change in production cost
C
macroeconomic trends
D
supply and demand trends
14

Income reaches the highest level at the point of the business cycle.

Answer not available
15

During a recession, what is one way governments try to encourage growth?

A
by increasing unemployment benefits
B
by stopping government spending
C
by requiring firms to maintain production
D
by eliminating all tax breaks
16

Which event most likely explains renewed demand in a recovery period?

C
Consumers choose to save more and spend less.
E
Economic policy renews consumer confidence and demand.
P
Producers decrease prices to prompt demand and recovery.
P
Production decreases to prompt increased demand.
17

There are four stages in an economic recovery. 1. increased production2. rising demand (occurs twice)3. increased hiring In which order do these stages occur?

A
2, 1, 2, 3
B
3, 2, 1, 2
C
2, 3, 1, 2
D
2, 1, 3, 2
18

There are five stages in a recession. 1. job loss2. falling production3. falling demand (occurs twice)4. peak production In which order do these stages occur?

4
4, 3, 2, 1, 3
3
3, 2, 1, 3, 4
4
4, 3, 2, 3, 1
4
4, 2, 3, 1, 3
19

Which of the following conditions is most indicative of recovery?

A
The economy has stopped shrinking.
B
The economy begins to peak.
C
The GDP continues to shrink.
D
The economy is growing again.
20

The graphs show the US unemployment rate and the price of whole milk between 2006 and 2012.

Question illustration
A
There is no link between prices and unemployment.
B
Rising unemployment rates drive prices higher.
C
Falling prices drive unemployment rates lower.
D
As unemployment rates rise, average prices fall.

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