Schumpeter attributed business cycles to:
Options
AInnovations
BWar
CPopulation
DMoney
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Business CyclesPYQ - July 2021Question 99 of 20
All Questions Correct Answer
✅ Option a — Innovations
All Options:
- AInnovations
- BWar
- CPopulation
- DMoney
Detailed Solution & Explanation
To understand the correct answer, let's break down the concept of business cycles and Schumpeter's theory.
• Schumpeter, an Austrian-American economist, is known for his work on business cycles and economic development.
• According to Schumpeter, business cycles are driven by innovations, which are new products, processes, or technologies that disrupt the market and lead to economic growth.
• Innovations create new opportunities for entrepreneurs, leading to investment, production, and employment, which in turn drive economic expansion.
• This theory is based on the concept of creative destruction, where old industries and technologies are replaced by new ones, leading to economic growth and development.
The correct answer is innovations because it is a key driver of business cycles, as per Schumpeter's theory.
• In contrast, war and population are not directly related to Schumpeter's theory of business cycles, and while money can play a role in economic activity, it is not the primary driver of business cycles according to Schumpeter.
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.
Key Concepts to Understand
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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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