Business CyclesPYQ - Nov 2020Question 85 of 20
All Questions

The different phases of a business cycle:

Options

ADo not have the same length and severity
BHave the same length and severity
CHave the same length but different severity
DHave different length but same severity
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Correct Answer

✅ Option a — Do not have the same length and severity

All Options:

  • ADo not have the same length and severity
  • BHave the same length and severity
  • CHave the same length but different severity
  • DHave different length but same severity

Detailed Solution & Explanation

To understand the phases of a business cycle, we need to consider the fluctuations in economic activity that occur over time. • The business cycle is a recurring pattern of expansion and contraction in economic activity, typically measured by changes in gross domestic product (GDP). • Each phase of the business cycle, including expansion, peak, contraction, and trough, has distinct characteristics and can vary in length and severity. • The length of a phase refers to the duration of time it lasts, while the severity refers to the intensity or magnitude of the changes in economic activity. • According to economic theories, such as the Keynesian theory, the business cycle is influenced by various factors, including aggregate demand, supply, and external shocks, which can affect the length and severity of each phase. The correct answer is based on the understanding that the phases of a business cycle do not follow a uniform pattern, and their length and severity can differ significantly. • Option C is incorrect because it suggests that the phases have the same length, which is not supported by economic data and theories. • Option D is also incorrect because it implies that the phases have the same severity, which is not consistent with the observed variations in economic activity during different phases.

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 Syllabus

Exam 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.

Key Concepts to Understand

Business Cycle

Fluctuations in economic activity (Expansion, Peak, Contraction, Trough).

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More Questions from Business Cycles

The lowest point in the business cycle is referred to as the:

Which of the following is not an example of coincident indicator?

Features of Business Cycles include:

Which one is an external cause of business cycles?

During expansion phase, employment:

Economic recession shares all of these characteristics except:

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