The distinguishing characteristics of business cycles are
A) periods of inflation followed by periods of deflation.
B) high rates of economic growth coupled with high rates of unemployment.
C) a constant rate of economic growth coupled with ups and downs in the general level of prices.
D) periods of growth in real output followed by periods of decline.

Question

Quizplus · Accepted Answer

Business cycles refer to the recurring patterns of ups and downs in real output (GDP) over time. These cycles are characterized by periods of economic growth and expansion, followed by periods of contraction and decline. Therefore, the best choice is D - periods of growth in real output followed by periods of decline. Choices A and B are incorrect because business cycles do not necessarily involve inflation or high rates of unemployment. Choice C is also incorrect because business cycles are marked by fluctuations in economic growth, not by constant growth with changes in prices.

The Distinguishing Characteristics of Business Cycles Are