Question

The boom of the business cycle can be best defined as:

                        a.) the period of prosperity of the business cycle.

                        b.) the general attempt to expand production and of all prices to rise.

                        c.) at least two consecutive quarters of growth in GDP.

                        d.) all the immediately above.

Answer 1

Since business cycle is referred as an economic model which describes fluctuation in economic activity. The economic activities includes production of goods and services.

The stages in the business cycle are expansion, peak, recession or contraction, depression, trough, and recovery.

It means that a business cycle goes through its phases in the sequence of Recession, trough, expansion and Peak.

In context of the business cycle boom, it is a stages of business cycle in which there is expansion in the economy. It means that production of goods and services are increasing, unemployment is also increasing and therefore income will also increase, so the aggregate demand will also increase. This leads to rightward shift of the aggregate demand. Hence price level increases and real GDP also increases.

Hence it can be said that the boom of the business cycle can be best defined as the period of prosperity of the business cycle, the general attempt to expand production and of all prices to rise and at least two consecutive quarters of growth in GDP.

It means first three options are correct.

Hence option d is the correct answer.