PRC-3 · Chapter 15 · Question 5 of 44
At the very bottom of the business cycle, an economy is plagued by massive, persistent unemployment, bankruptcies, and completely stagnant demand. This severe, prolonged trough is termed a:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Depression
Explanation
A depression is an unusually severe and prolonged recession, representing the deep trough of a business cycle where economic activity is virtually stagnant.
More Multiplier and Accelerator MCQs
- Q7Which of the following describes the correct chronological sequence of a standard business cycle?
- Q8A nation notices that it requires Rs. 4 worth of new heavy machinery (capital) to permanently produce Rs. 1 worth of extra annual output…
- Q9The government spends Rs. 100 million building a hospital. The construction workers spend 80% of their new wages on food and clothes. The…
- Q10While the Multiplier shows how Investment drives Consumption, the 'Accelerator Theory' focuses on the reverse relationship. It states that:
- Q11If a nation's citizens decide to suddenly save a massive portion of their income out of fear of a recession, causing the Marginal…