CIMA BA1 · Chapter 2 · Question 6 of 10
Which of the following is most likely to be observed during the recession phase of the business (trade) cycle?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Business investment falls and unemployment rises
Explanation
In a recession, output and incomes fall, so firms cut investment and employment. Tax receipts tend to fall, import spending falls with incomes and inflationary pressure is weak. Labour shortages and inflation are features of a boom.
More Macroeconomic policy and the business cycle MCQs
- Q8A central bank raises its policy interest rate. Assuming other things remain equal, which of the following is the most likely consequence?
- Q9Which of the following is an example of a supply-side policy?
- Q10The term 'crowding out' in macroeconomics refers to:
- Q1Which of the following is NOT normally regarded as one of the main objectives of government macroeconomic policy?
- Q2Which of the following combinations represents an expansionary fiscal policy?