AnswersHSA 26-27 EconomicsThe Business Cycle

The Business Cycle Answers

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Which best describes how a recession develops as demand and production decrease?

A
The recession enters a recovery period.
B
The recession slows.
C
The recession accelerates.
D
The recession starts and stops.
2
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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
3

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.
4

Read a passage from a speech given by President Barack Obama.Because of this plan, families who are struggling to pay tuition costs will receive a $2,500 tax credit . . . And Americans who have lost their jobs in this recession will be able to receive extended unemployment benefits.–President Barack Obama, February 4, 2009

A
It describes government measures to stimulate demand and bring about a recovery.
B
It describes government measures to increase production and bring about a depression.
C
It describes a shift in government policies during a trough on the business cycle.
D
It describes a shift in government policies during a peak on the business cycle.
5

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

A
a recession.
B
a recovery.
C
prosperity.
D
the peak.
6

Why might buying a home during a recession be a good decision for some consumers? Choose three answers.

A
Housing prices are down.
B
It is easier to get a mortgage.
C
Less demand means more options for buyers.
D
Less demand means less competition with other buyers.
E
Fewer houses are on the market.
7

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.
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

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