Which of the Following Statements About the Business Cycle Is

question 61

Multiple Choice

Which of the following statements about the business cycle is false?

• A) Toward the end of a recession, financial stocks typically increase in value as investment and borrowing activities accelerate.
• B) Once the economy hits a trough and begins to recover, consumer durable stocks become attractive investments.
• C) Once the economy has recovered and current levels of consumption are sustainable, businesses may consider modernizing or expanding, thus stocks of capital goods industries become attractive investments.
• D) As the business cycle reaches a peak, inflation rates decrease.
• E) None of the above (that is, all are true statements)

---

Definitions:

Keynesian Model

An economic theory advocating for government intervention in the economy through fiscal policies to manage demand and address unemployment.

Creeping Inflation

A relatively low rate of inflation, such as the rate of less than 4 percent in the United States in recent years.

Market Economies

Economic systems in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's citizens and businesses.

Line Segment ST

A part of a line that is bounded by two distinct end points, labeled S and T.