Which Statement Characterizes Business Cycles

question 53

Multiple Choice

Which statement characterizes business cycles?

• A) They are predictable fluctuations in consumption.
• B) They are no longer very important due to government policy.
• C) They are fluctuations in real GDP and related variables over time.
• D) They are easily predicted by competent economists.

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Definitions:

Recessionary Gap

A situation in an economy where the actual output is less than the potential output, indicating underutilized resources and unemployment.

Raise G

This term is ambiguous without context, but it could refer to increasing government spending or investment in certain contexts.

Social Security Tax

A tax paid equally by employee and employer, based on employee’s wages. Most proceeds are used to pay Social Security retirement and Medicare benefits.

Personal Income Tax

A tax levied on individuals or entities based on their income or profits.