The Distinguishing Characteristics of Business Cycles Are

question 58

Multiple Choice

The distinguishing characteristics of business cycles are

• A) periods of inflation followed by periods of deflation.
• B) high rates of economic growth coupled with high rates of unemployment.
• C) a constant rate of economic growth coupled with ups and downs in the general level of prices.
• D) periods of growth in real output followed by periods of decline.

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Definitions:

Relative Purchasing Power Parity

An economic theory that suggests exchange rates between currencies adjust to negate changes in purchasing power.

Expected Inflation

The rate at which the general level of prices for goods and services is anticipated to rise.

Absolute Purchasing Power Parity

A theory that suggests that in the absence of transportation and other transaction costs, identical goods in different countries should have the same price when expressed in a common currency.

Exchange Rate

The price of a single currency in terms of another currency.