Economic recession shares all of these characteristics except:
Options
AFall in levels of employment
BFall in levels of investment
CIncrease in price of inputs
DFall in levels of income
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Business CyclesPYQ - Nov 2019Question 84 of 20
All Questions Correct Answer
✅ Option c — Increase in price of inputs
All Options:
- AFall in levels of employment
- BFall in levels of investment
- CIncrease in price of inputs
- DFall in levels of income
Detailed Solution & Explanation
To determine the correct answer, let's analyze the characteristics of economic recession.
• Economic recession is a period of economic decline, typically defined as a decline in gross domestic product (GDP) for two or more consecutive quarters.
• During a recession, there is a fall in aggregate demand, leading to a decrease in production and employment.
• This decrease in production and employment results in a fall in levels of income, as people have less money to spend.
• Additionally, a recession often leads to a fall in levels of investment, as businesses and individuals become more cautious about spending and investing.
The correct answer is the option that does not fit with these characteristics of economic recession.
• An increase in the price of inputs is not typically a characteristic of recession, as recessions are often associated with deflation or low inflation, rather than high inflation or increasing prices.
• In contrast, a fall in levels of employment and a fall in levels of income are both common characteristics of recession, as they are direct results of the decline in aggregate demand and production.
About This Chapter: Business Cycles
Paper
Paper 4: Business Economics
Weightage
5%
Key Topics
Phases, Features, Causes
Business Cycles describe the recurring fluctuations in economic activity — Expansion, Peak, Recession, and Trough. This chapter covers the phases, features, and causes of business cycles, along with theories explaining why economies go through regular boom-bust patterns.
View Official ICAI SyllabusExam Strategy Tip
This is a lower-weightage chapter but easy to score. Focus on memorizing the four phases and their characteristics. Questions are usually straightforward.
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