Question

A business cycle is the period of time in which: a. a business is established and ceases operations. b. there are four phases: peak, recession, trough and expansion. c. the price level varies with real GDP. d. expansion and contraction of economic activity are equal. e. none of the above are true.

Answer 1

Answer:

The correct answer is letter "B": there are four phases: peak, recession, trough and expansion.

Explanation:

The business cycle refers to the fluctuations that an economy faces throughout the economic activity. It consists of economic expansions or periods of growth and contractions or periods of economic decline. When the expansion reaches its peak there is usually a downturn followed by a contraction in the economy. The point where the economy starts to recover is called trough after which expansion takes place repeating the cycle.