Which of the following statements are NOT true?
A)Peaks in the business cycle tend to occur when the capacity-to-output gap is the largest.
B)Peaks in the business cycle tend to occur when the capacity-to-output gap is the smallest.
C)Troughs occur when the capacity-to-output gap is the largest.
D)None of the above.

Question

Quizplus · Accepted Answer

Peaks in the business cycle actually occur when the capacity-to-output gap is the smallest, not the largest. This is because at the peak, the economy is running at or near its full capacity.

Which of the Following Statements Are NOT True