The business cycle describes fluctuations in output around the?
Correct answer: A. trend path of output
- A. trend path of output
- B. boom
- C. recession
- D. short-run fluctuations in output
Explanation
Business cycles are temporary expansions and contractions in economic activity around the economy's long-term trend path of output. A boom and a recession are phases within the cycle, not the benchmark around which it fluctuates.
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About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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