CA Foundation P4 · Chapter 6 · Question 5 of 15
Which of the following is a characteristic of the depression phase?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Large-scale unemployment and a sharp fall in output and prices
Explanation
During depression aggregate demand is very low, firms cut production, unemployment is widespread, prices and profits fall and business confidence is weak. Full capacity, rising wages and optimism characterise the boom phase.
More Business Cycles MCQs
- Q7The view that the trade cycle is 'a purely monetary phenomenon' caused by expansion and contraction of bank credit is associated with:
- Q8According to Schumpeter, business cycles are caused by:
- Q9The theory that business cycles result from waves of optimism and pessimism among businessmen is associated with:
- 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: