Which of the Following Statements About the Business Cycle Is

question 10

Multiple Choice

Which of the following statements about the business cycle is false?

• A) Toward the end of a recession, financial stocks typically increase in value as investment and borrowing activities accelerate.
• B) Once the economy hits a trough and begins to recover, consumer durable stocks become attractive investments.
• C) Once the economy has recovered and current levels of consumption are sustainable, businesses may consider modernising or expanding, thus stocks of capital goods industries become attractive investments.
• D) As the business cycle reaches a peak, inflation rates decrease.
• E) None of the above (that is, all are true statements).

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Definitions:

Control Accounts

Summary accounts in the general ledger that consolidate the details recorded in subsidiary ledgers for management and reporting purposes.

Accounting System

A system used by businesses for tracking their financial transactions, consisting of various processes, records, and reports.

Special Journals

Journals that record similar types of transactions, such as all credit sales.