The defining feature of business cycles is that they
A) are inherently bad.
B) represent the underlying trend of real GDP in the economy.
C) are fluctuations about trend in real GDP.
D) measure prospects for future growth in the economy.

Question

Quizplus · Accepted Answer

Business cycles are fluctuations in economic activity around the long-term trend of real GDP. These fluctuations are characterized by periods of economic growth (expansions) and periods of economic contraction (recessions). While business cycles can include negative effects such as high unemployment during recessions, they are not inherently bad as they also include periods of economic growth and prosperity. Business cycles do not measure prospects for future growth but rather describe fluctuations in economic activity over time.

The Defining Feature of Business Cycles Is That They