CA Foundation P4 · Chapter 6 · Question 8 of 15
According to Schumpeter, business cycles are caused by:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Innovations introduced by entrepreneurs
Explanation
Schumpeter's innovation theory holds that the introduction of new products, methods or markets triggers bursts of investment, leading to expansion. As innovations are absorbed and imitators enter, the boom gives way to contraction.
More Business Cycles MCQs
- Q10The 'sunspot theory' of business cycles, which linked fluctuations in agricultural output to changes in sunspot activity, was put forward…
- Q11The worldwide economic downturn that began with the stock market crash of 1929 is known as:
- Q12A commonly used rule of thumb defines a recession as:
- Q13To counter a recession, the government is most likely to:
- Q14Samuelson and Hicks explained business cycles through the interaction of: