A Business Cycle Is The

question 37

Multiple Choice

A business cycle is the:

• A) period of time in which expansion and contraction of economic activity are equal.
• B) period of time in which there are three phases: peak, depression, and recovery.
• C) recurring growth and decline in real GDP.
• D) period of time in which a business is established and ceases operations.

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Definitions:

Consumer Surplus

The gap between the price consumers are ready to offer for a good or service and the effective amount they spend on it.

Trade

The process of purchasing, vending, or trading products and services among individuals or nations.

Factor Endowments

The amount of land, labor, capital, and entrepreneurship that a country or region possesses, which determines its comparative advantage in international trade.

Comparative Advantage

The ability of an individual or entity to produce goods or services at a lower opportunity cost than other producers.