Business cycle persistence refers to the property that
A) real GDP is rarely exactly at trend.
B) booms and recessions last a long time.
C) when real GDP is above trend, it tends to stay above trend, and when it is below trend, it tends to stay below trend.
D) business cycles are persistently hard to predict.
E) real GDP tends to stay in the peaks and troughs of the business cycle.

Question

Quizplus · Accepted Answer

Business cycle persistence means that deviations from trend tend to persist. Therefore, when real GDP is above trend, it tends to stay above trend, and when it is below trend, it tends to stay below trend.

Business Cycle Persistence Refers to the Property That