The Business Cycle Consists of Four Phases

question 50

Multiple Choice

The business cycle consists of four phases. At the top we have:

• A) expansion, followed by peak, and then trough followed by a recession.
• B) expansion, followed by a recession, and then peak followed by recession.
• C) peak, then a trough followed by a recession, and then expansion.
• D) peak, then a recession followed by a trough, and finally, recovery.

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Definitions:

Factor Distribution

The way in which income and wealth are shared among different factors of production, such as labor and capital.

Income

The amount of money or its equivalent received during a period of time in exchange for labor or services, from the sale of goods or property, or as a profit from financial investments.

Derived Demand

The demand for a good or service that arises from the demand for another good or service. For example, the demand for steel is derived from the demand for cars.

Factor Market

A market where factors of production (such as labor, capital, and land) are bought and sold, different from markets for goods and services.