A business cycle is the period of time in which:

Question

Quizplus · Accepted Answer

A business cycle refers to the fluctuations in economic activity that occur over time. These fluctuations include periods of expansion, where the economy grows and economic activity increases, and periods of contraction, where the economy shrinks and economic activity decreases. Therefore, the best choice is D, which states that a business cycle is characterized by the expansion and contraction of economic activities. Choice A is incorrect because a business cycle refers to a period of time, not the establishment or cessation of a business. Choice B is incorrect because while there are different phases in a business cycle, such as the peak, recession, and recovery, there is no specific order or requirement for these phases. Choice C is incorrect because while real GDP may decline during a recession or contraction phase of the business cycle, it is not a defining characteristic of a business cycle.

A Business Cycle Is the Period of Time in Which