In macroeconomics, the business cycle refers to:

Question

BlackTom AI · Accepted Answer

The question asks about the definition of the business cycle in macroeconomics, so each option should be evaluated against that concept.
Option 1: 'Fluctuations in the level of output' — This correctly describes the business cycle, which involves periods of expansion and contraction in real GDP or aggregate output over time.
Option 2: 'Fluctuations in government expenditures' — While government spending can influence the cycle, these fluctuations are policy actions and not the fundamental description of what the business cycle is; the cycle is about overall output, not a specific component like expenditures.
Option 3: 'Fluctuations in inflationary expectations' — Inflation expectations can move during different phases of the cycle, but this option misframes the cycle itself as changes in expectations rather than actual output fluctuations; it’s a related variable, not the defining feature.
Option 4: 'Fluctuations in the general price level' — Changes in the price level (inflation or deflation) occur within the context of the cycle but are not the description of the business cycle itself; the cycle centers on real output, not solely price level movements.
Putting it together, the core idea of the business cycle is the alternating growth and contraction in real output, with other variables like government spending, inflation expectations, or price level behaving differently within or across those phases.

ECON 2002.01 SP2025 (25230) Midterm Exam 2

In macroeconomics, the business cycle refers to:

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ECON 2002.01 SP2025 (25230) Midterm Exam 2

In macroeconomics, the business cycle refers to:

View Explanation

Log in for full answers

Similar Questions

Use the following diagram to answer the next question. The phases of the business cycle from points A to D are, respectively

Based on your answer to the previous question, you know that the economy is currently in a boom .

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More Practical Tools for International Students

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