Which of the following characterizes the nature of economic fluctuations?
A) The number of businesses started changes.
B) The TSX average fluctuates relative to a long-term economic growth trend.
C) Consumption spending changes.
D) The level of economic activity fluctuates, relative to a long-term economic growth trend.

Question

Which of the following characterizes the nature of economic fluctuations?  
A) The number of businesses started changes. 
B) The TSX average fluctuates relative to a long-term economic growth trend. 
C) Consumption spending changes. 
D) The level of economic activity fluctuates, relative to a long-term economic growth trend.

Quizplus · Accepted Answer

The level of economic activity, as measured by indicators such as GDP, employment, and inflation, fluctuates over time relative to a long-term economic growth trend. This is the defining characteristic of economic fluctuations, which are also known as business cycles. Changes in the level of consumption spending and business starts can be components of fluctuations in economic activity. The TSX average is a financial market indicator that can reflect changes in economic conditions, but it is not a direct measure of economic growth.

Which of the Following Characterizes the Nature of Economic Fluctuations