When the economy fluctuates around its long-run aggregate supply:
A) it is called the business cycle.
B) the economy is in a state of chaos.
C) the value of currency becomes unstable.
D) we must be in a recession.

Question

Quizplus · Accepted Answer

When the economy fluctuates around its long-run aggregate supply, it is called the business cycle. The business cycle is a natural occurrence in a market economy characterized by periods of expansion and contraction. It is generally composed of four stages: expansion, peak, contraction, and trough.

When the Economy Fluctuates Around Its Long-Run Aggregate Supply