CA Foundation P4 · Chapter 6 · Question 15 of 15
Which of the following statements about the impact of business cycles is INCORRECT?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) All sectors of the economy are affected equally during a downturn
Explanation
Purchases of durable and capital goods can be postponed, so these industries usually show sharper fluctuations than necessities. Hence sectors are not affected equally. Business cycles do influence investment, inventory and hiring decisions, and downturns typically reduce profits and employment.
More Business Cycles MCQs
- Q2Which statement about business cycles is correct?
- Q3Which of the following is generally regarded as a leading indicator of economic activity?
- Q4Industrial production, which moves at the same time as the overall economy, is an example of a:
- Q5Which of the following is a characteristic of the depression phase?
- Q6According to Keynes, business cycles are caused mainly by: