Economics - Economics Section 2

1. During the early expansion phase of a business cycle, inflation is most likely to:

  • Option : C
  • Explanation : During the early expansion phase of a business cycle, inflation remains moderate and may continue to fall.
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2. A recession is least likely associated with:

  • Option : C
  • Explanation : A recession is associated with decelerating inflation.
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3. In a business cycle, a trough is most likely to be followed by a/an:

  • Option : B
  • Explanation : A trough is followed by an expansion.
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4. The unemployment rate is most likely to rise during which phase of the business cycle?

  • Option : A
  • Explanation : The unemployment rate rises in contraction, remains high in early expansion, and falls during peak.
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5. An analyst states that ‘Inflation picks up modestly during this phase of the business cycle.’ Which phase is she most likely referring to?

  • Option : C
  • Explanation : Inflation remains moderate but may fall during an early expansion. Generally, inflation picks up modestly during a late expansion, and decelerates with a lag during a contraction.
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