CA FOUNDATION PAPER - 4 (BUSINESS ECONOMICS) 500+ MCQs
CHAPTER - 5 BUSINESS CYCLE MOST IMPORTANT OBJECTIVE QUESTIONS
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1. The term business cycle refers to
-
(a) The ups and downs in production of commodities.
(b) The fluctuating levels of economic activity over a period of time.
(c) Decline in economic activities over prolonged period of time.
(d) Increasing unemployment rate and diminishing rate of savings.
2. The economy-wide fluctuations in production, trade and general economic activity is referred as:
-
(a) Business Cycle
(b) Economic cycle
(c) Boom-bust Cycle
(d) All of the above.
3. Greatest depression suffered by economy in which year.
-
(a) 1924
(b) 1930
(c) 2008
(d) 2009
4. Which is not related to great depression of 1930?
-
(a) It stated in USA
(b) John Maynard Keynes regarded lower aggregate expenditure as the cause
(c) Excess Money Supply
(d) Both (a) and (b)
Phases of Business Cycle
5. The business Cycles or the periodic booms and slumps in economic activities reflect the_______ In economic activities.
-
(a) Upward movements
(b) Downward movements
(c) Upward and downward movements
(d) Extreme rise
6. Select the odd out:
-
(a) Expansion
(b) Boom
(c) Upswing
(d) Trough
7. _________ represents the steady growth line or the growth of the economy when there are no business cycles.
-
(a) peak
(b) trend
(c) Depression
(d) Expansion
8. The four phases of the business cycle are
-
(a) Peak, recession, trough, and Boom
(b) Peak, depression, trough, and boom
(c) Peak, recession, trough, and recovery
(d) Peak, depression, bust, and boom
9______state continues till there is full employment of resources and production is at its maximum possible level using available productivity resources.
-
(a) Expansion
(b) Peak
(c) Contraction
(d) Depression
10. The different phases of a business cycle
-
(a) Do not have the same length and severity
(b) Expansion phase always last more than ten years
(c) Last many years and are difficult to get over in short periods
(d) None of the above
11. In__________phase, the overall economic activities (i.e. Production and Employment) are at the lowest level.
-
(a) Expansion
(b) Trough
(c) Peak
(d) Bottom
12. Peaks and troughs of the business cycle are known collectively as
-
(a) Volatility
(b) Turning points
(c) Equilibrium points.
(d) Real business cycle events
13. The expansion phase is characterized by high growth rate. What is the next phase after expansion?
-
(a) Peak
(b) Contraction
(c) Downstream
(d) None of the above
14. Which of the following does not occur during an expansion?
-
(a) Consumer purchases of all types of goods tend to increase.
(b) Employment increases as demand for labour rises.
(c) Business profits and business confidence tend to increase
(d) None of the above.
15. Which phase is the Highest point of the business Cycle?
-
(a) Upswing
(b) Downswing
(c) Peak
(d) Trough
16. _________is the turning point and the beginning of recession.
-
(a) Contraction
(b) Depression
(c) Upswing
(d) Boom
17. A significant decline in general economic activity extending over period of time is
-
(a) Business cycle
(b) Contraction phase
(c) Recession
(d) Recovery
18. When aggregate economic activity is declining, the economy is said to be in
-
(a) Contraction.
(b) An expansion.
(c) A trough.
(d) A turning point.
19. Economic recession shares all of these characteristics except.
-
(a) Fall in the levels of investment, employment
(b) Incomes of wage and interest earners gradually decline resulting in decreased demand for goods and services
(c) Investor confidence is adversely affected and new investments may not be forthcoming
(d) Increase in the price of inputs due to increased demand for inputs
20. Which one of the following is not a feature of Contraction?
-
(a) Decrease in input demand pulls input prices down
(b) Increases of wage and interest earns gradually decline
(c) Producers lower their prices in order to dispose of their inventories
(d) Business Firms become optimistic about future state of economy.
21. During recession, the unemployment rate_____ and output_______.
-
(a) Rises; falls
(b) Rises; rises
(c) Falls; rises
(d) Falls; falls
22______phase of business cycle marks the end of pessimism and the beginning of optimism.
-
(a) Recovery
(b) Depression
(c) Upswing
(d) Downswing
23. The trough of a business cycle occurs when_____ hits its lowest point.
-
(a) Inflation in the economy
(b) The money supply
(c) Aggregate economic activity
(d) The unemployment rate
24. The lowest point in the business cycle is referred to as the
-
(a) Expansion.
(b) Boom.
(c) Peak.
(d) Trough.
25. The period 1929-33 is cited for_______ of world economy.
-
(a) Great depression
(b) Great Recovery
(c) Great upswing
(d) Great downswing
26. In Recovery phase of business Cycle, the process of reversal is initially felt in the______
-
(a) Capital market
(b) Labour market
(c) Production level
(d) Financial market.
27. Boom and depreciation in business cycle are
-
(a) Turning points
(b) Equilibrium points
(c) Both (a) and (b)
(d) None of the above
28. Which of the following is not the phase of business cycles?
-
(a) Prosperity
(b) Upswing
(c) Reconstruction
(d) Depression
29. Which of the following is not an example of coincident indicator?
-
(a) Industrial production
(b) Inflation
(c) Retail sales
(d) New orders for plant and equipment
30. Leading economic indicators
-
(a) Are used to forecast probable shifts in economic policies
(b) Are generally used to forecast economic fluctuations
(c) Are indicators of stock prices existing in an economy
(d) Are indicators of probable recession and depression
31. A leading indicator is
-
(a) A variable that tends to move along with the level of economic activity.
(b) A variable that tends to move in advance of aggregate economic activity.
(c) A variable that tends to move consequent on the level of aggregate economic activity.
(d) None of the above.
32. A variable that tends to move later Which of than economic activity is called
-
(a) A leading variable.
(b) A coincident variable.
(c) A lagging variable
(d)A cyclical variable.
33. Which of the following best describes a typical business cycle?
-
(a) Economic expansions are followed by economic contractions
(b) Inflation is followed by rising income and unemployment.
(c) Economic expansions are followed by economic growth and development
(d) Stagflation is followed by inflationary economic growth.
34. Which of the following is true about leading indicators?
-
(a) Measurable economic factors
(b) Changes after real output
(c) Both (a) and (b)
(d) None
35. Last stage of recession is called:
-
(a) Depreciation
(b) Recovery
(c) Slowdown
(d) All of these
36. When once peak is reached. increase in demand is salted, then phase______ begins?
-
(a) Trough
(b) Contraction
(c) Expansion
(d) Trend
37. Which of the following macro economic variables would you include in an index of leading economic indicators?
-
(a) Employment
(b) Inflation
(c) Real interest rates
(d) Presidential investment
38. An economic variable that moves in the opposite direction as aggregate economic activity down in expansions up in contractions is called.
-
(a) Procyclical
(b) Counter cyclical
(c) A cyclical
(d) A leading variable
39. Fashion Retailer is business of?
-
(a) Cyclical business
(b) Sun rise business
(c) Sluggish business
(d) None of these
40. Rampant unemployment is found in:
-
(a) Boom
(b) Recovery
(c) Contraction
(d) Depression
41. Economics activities will be declining in the phase of_______
-
(a) Expansion
(b) Depression
(c) Contraction
(d) peak
42. In the later stages of expansion, inputs are difficult to find as they are_____ of their demand and therefore & input prices_____
-
(a) Short, increase
(b) Excess, increases
(c) Short, decrease
(d) Excess, decrease
43. The economy cannot continue to grow endlessly. Once Peak is reached, _______in demand is halted& starts________ in certain sectors.
-
(a) Increase, decreasing
(b) Decrease, Increasing
(c) Increase, Increasing
(d) Decrease, Decreasing.
44.________of is the severe form of ________.
-
(a) Depression, Recovery
(b) Depression, Recession
(c) Recession, Depreciation
(d) Recession, Recovery.
45. The great depression of is still cited for the enormous misery and human sufferings it caused.
-
(a) 1929-1930
(b) 1929-1931
(c) 1929-1932
(d) 1929-1933
46. Which of the following statement is False?
-
(a) No economy follows a perfectly timed Cycle.
(b) Business Cycles vary in intensity and length.
(c) There is no set pattern which Business Cycles follow.
(d) Every Business Cycle has relatively longer period.
Features of Business Cycles
47. Industries that are extremely sensitive to the business cycle are the
-
(a) Durable goods and service sectors.
(b) Non-durable goods and service sectors,
(c) Capital goods and non-durable goods sectors.
(d) Capital goods and durable goods sectors.
48. Business Cycle occurs
-
(a) Periodically
(b) In different phases
(c) Both (a) and (b)
(d) None of the above
49. Features of business cycles include?
-
(a) Discuss periodically
(b) Have four different phases
(c) Originate in free Market Economy
(d) All of the above.
50. Which of the following is not a characteristic of business cycles
-
(a) Business cycles have serious consequences on the well being of the society.
(b) Business cycles occur periodcally, although they do not exhibit the same regularity.
(c) Business cycles have uniform characteristics and causes
(d) Business cycles are contagious and unpredictable.
51. Which is not the characteristic feature of expansion phase in business cycle?
-
(a) Increase in national output
(b) Unemployment
(c) Rise in price and costs
(d) Boost in business confidence
52. Business Cycles are exceedingly Complex phenomena because
-
(a) They do not have uniform characteristics and causes.
(b) They are caused by varying factor.
(c) It is difficult to make an accurate prediction of trade cycles before their occurrence.
(d) All of the above
53. Repercussions of Business Cycles get simultaneously felt on the economic variable:
-
(a) Output and employment.
(b) Investment & Consumption
(c) Interest, Trade & Price levels
(d) All of the above.
54. Business Cycles have____ consequences on the well- being of the society.
-
(a) Some
(b) Serious
(c) No
(d) Moderate
55. What is incorrect about business Cycle?
-
(a) They occur periodically
(b) They exhibit same regularity
(c) The duration of Cycles vary
(d) The intercity varies of fluctuations also
56. The disturbances in one or more Sectors
-
(a) Do not affect
(b) Equally affect
(c) Gets easily transmitted to all
(d) None of the above.
Causes of Business Cycle
57. Business Cycles may occur due to
-
(a) External Causes
(b) Internal Causes
(c) Both (a) & (b)
(d) Either (a) or (b)
58. According to some economists, are_________ the prime causes of business cycles.
-
(a) Fluctuations in effective demand
(b) Fluctuations in investments
(c) Macroeconomic policies
(d) All of the above
59. Which internal factor affect the Business cycle?
-
(a) Fluctuations in investment
(b) Natural factors
(c) Technology shocks
(d) Population growth
60. The internal causes of business cycle is
-
(a) Fluctuation in effective demand
(b) Technology shocks
(c) Both (a) and(b)
(d) None
61. A decrease in government spending would cause
-
(a) The aggregate demand curve so shift to the right.
(b) The aggregate demand curve to shift to the left
(c) A movement down and to the right along the aggregate demand curve.
(d) A movement up and to the left along the aggregate demand curve.
62. Modern business activities are based on the anticipations of business community and are affected by waves of optimism or pessimism, according to
-
(a) Pigou
(b) Keynes
(c) Hawtrey
(d) Schumpeter
63. According to trade cycles occur due to onset of innovations.
-
(a) Hawtrey
(b) ADAM Smith
(c) JM Keynes
(d) Schumpeter
64. Whose statement out of these is false?
-
(a) Hawtrey "Trade cycle is purely Monetary phenomena
(b) Keynes "Fluctuations in aggregate Demand”
(c) Pigou "Fluctuations in investment"
(b) Schumpeter- "Innovations"
65. The most probable outcome of an increase in the money supply is
-
(a) Interest rates to rise, investment spending to rise, and aggregate demand to rise.
(b) Interest rates to rise, investment spending to fall, and aggregate demand to fall.
(c) Interest rates to fall, investment spending to rise, and aggregate demand to rise.
(d) Interest rates to fall, investment spending to fall, and aggregate demand to fall.
66. In the long run, a reduction in labour supply would cause output to ______and the aggregate price level To________
-
(a) Fall, rise
(b) Fall, fall
(c) Rise, fall
(d) Rise, rise.
67. Endogenous factors refers to causes:
-
(a) Internal
(b) External
(c) Economic
(d) Ecological
'
68. According to which economist trade cycle is a purely monetary for phenomenon
-
(a) Schumpeter
(b) Pigou
(c) Hawtrey
(d)Marshall
69. The difference between exports and imports is the______ for goods and Services.
-
(a) Not foreign demand
(b) Gross Foreign demand
(c) Net Outflow
(d) Net Inflow
70. The external causes which may lead to boom or bust do not include
-
(a) Psychological Factors
(b) Wars
(c) Technology Shocks
(d) Natural Factors
71._______theory holds that business cycles result from the fact that present prices substantially influence the production at some future date.
-
(a) Schumpeter's
(b) Hawtrey's
(c) Cobweb
(d) Pigou's
72. Who propounded the Cobweb theory?
-
(a) Nicholas Kaldor
(b) Hawtrey
(c) Adam Smith
(d) Schumpeter
73. According to_______Trade Cycle is a purely monetary phenomenon.
-
(a) Nicholas Kaldor
(b) Hawtrey
(o) Adam Smith
(d) Schumpeter
74. According to _______modern business activities are based on the anticipations of business Community
-
(a) Pigou
(b)Schumpeter
(c)Adam Smith
(d) Hawtrey
75. In a free market economy, where maximization of profits is the aim of business, a higher level of aggregate demand will induce businessmen to produce more. As a request, there will be more______
-
(a) Output
(b) Income
(c) Employment
(d) All of these
76. When companies lay off workers consumers lose their jobs and stop buying anything but necessitates. That causes a_____
-
(a) Downward Spiral
(b) Cross Spiral
(c) Upward Spiral
(d) Triangle Spiral
77. _______is considered to be the most volatile Component of the aggregate demand.
-
(a) Investment Spending
(b) Saving Flow
(c) Expenditure behaviour
(d) None of these
78. Investments may rise when the rate of interest is economy. ______in the
-
(a) High
(b) Moderate
(c) Low
(d) Very high
79. Increase in investment; shift the aggregate demand to the______leading to______
-
(a) Right, economic expansion
(b) Right, depression
(c) Left, economic expansion
(d) Left, depression.
80. The most common method of boosting aggregate demand is_____
-
(a) Increased Government Spending
(b) Tax Cuts
(c) Both (a) & (b)
(d) None of these
81. The macroeconomic policies which cause business Cycles may be:
-
(a) Monetary Policy
(b) Fiscal Policy
(c) Both (a) & (b)
(d) None of these
82. In case of softening of interest rates,____
-
(a) There will be inflationary effects and increase in unemployment rates.
(b) There will be deflationary effects and increase in unemployment rates.
(c) There will be inflationary effect and decline in employment rates.
(d) There will be deflationary effects and decline in employment rates
83. Which of the following is anti- inflationary measure which causes a downward pressure on the aggregate demand and the economy slows down?
-
(a) Reduction in Government Spending
(b) Increase in Taxes
(c) Increase in Interest Rates
(d) All of these.
84. How many phases are their in business cycle?
-
(a) Four
(b) Five
(c) One
(d) Many
85. Business Cycles effect of an economy.
-
(a) Social Aspects
(b) Economic Aspects
(c) All Aspects
(d) No Aspects
86. The period of prosperity opens up new and superior opportunities for thereby promotes business.
-
(a) Investment and Unemployment
(b) Employment and Production
(c) Production. Unemployment & Savings
(d) Investment, Employment and Production
87. A period of _____reduces business opportunities and profits.
-
(a) Recession
(b) Depression
(c) Either (a) or (b)
(d) None of these
88. Business Cycles have _______Influence on Business decisions.
-
(a) at Negligible
(b) Least
(c) No
(d) Tremendous
89. Which External Factor affect the business cycle?
-
(a) Population growth
(b) Variation in government spending
(c) Money supply
(d) Macro economic policies
90. Economy-wide trends can have significant impact on_____
-
(a) Capital Goods Industries
(b) FMCG Industrie
(c) Social activities
(d) All types of business.
91. Business cycle is contagious and______in character?
-
(a) Local
(b) Regional
(c) National
(d) International
92. Businesses whose fortunes are closely linked to the rate of eco- nomic growth are referred to as ______business.
-
(a) FMCG
(b) Durable goods
(c) Fluctuating
(d) Cyclical
93. The world economy suffered the longest, deepest and most widespread depreciation of the 20th century during?
-
(a) 1934
(b) 1928
(c) 1930
(d) 1932
94. Which of the following business are examples of "Cyclical business"
-
(a) Fashion retailers, electrical goods & house-builders
(b) Restaurants, advertising and overseas tour operators
(c) Construction and other infrastructure firms
(d) All of the above
95. The Stage/phase of the business Cycle is important for
-
(a) Making managerial decisions regarding expansion or down- sizing.
(b) A new business to decide on entry into the market.
(c) The success of a new product
(d) All of the above.
96. Due to recession, employment rate and output _______respectively.
-
(a) Rises and rises
(b) Falls and falls
(c) Rises and falls
(d) Falls and rises
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