Uncertainty Tends to Amplify Business Cycles Because

question 170

Multiple Choice

Uncertainty tends to amplify business cycles because:

• A) many investments are irreversible with large sunk costs;thus investors decrease investment during bad times and wait until they are more certain about the future direction of the economy.
• B) fewer people tend to go to college during recessions because of the uncertainty in the job market and thus lower education leads to lower productivity.
• C) investment tends to correlate with prices and therefore both prices and investment tend to rise during booms and decrease during recessions.
• D) resource providers have less demand for their materials during recessions and thus less certain sales expectations.

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Definitions:

Operating Efficiencies

Refers to the ability of an organization to minimize costs and resource use while maximizing output and productivity.

Government Regulations

Rules and standards established by governmental bodies that are meant to control and guide the activities of various industries and organizations.

Work Arrangements

The structures and patterns of work, including hours, location, and contractual terms.

Planning

The process of setting goals, defining strategies, and outlining tasks and actions to achieve those goals.