Question

A business cycle is an example of?
(a)irregular variations
(b)secular trend
(c)seasonal variations
(d)cyclical variations​

Answer 1

Business Cycle is a cyclical variation. (option d)

• "It refers to the recurring ups and downs in the aggregate economic activity in an economy."
• It has alternating boom and recession periods that repeat periodically.
• These fluctuations in the economic activity are short-run.
• The business cycle has four phases:

1. Expansion(boom): The period of prosperity and increased level of output and employment.
2. Peak: This is the highest point of economic prosperity characterized by a large inflow on investments and an increase in output, income, and employment.
3. Recession: The economic activity is falling with decreasing income, output, and employment.
4. Depression: This is a severe form of recession characterized by a huge decline in output and employment.