Question

Which statement about business cycles in the United States is most accurate? Multiple Choice Business cycles occur precisely every five years. Long-term business cycles have only two phases—boom and bust. Seasonal business cycles occur within a year. Business cycles are impossible to identify.

Answer 1

Business cycles in the United States are characterized by fluctuating periods of economic expansion and contraction, which do not follow a precise or predictable pattern, and involve four phases rather than just a boom and bust.

Step-by-step explanation:

The most accurate statement about business cycles in the United States is that they do not follow a predictable, precise pattern, such as occurring every five years. Instead, business cycles are characterized by periods of economic expansion and contraction that occur around a long-term growth trend. These fluctuations are not mechanically regular and can be quite complex, typically involving four phases: expansion, peak, contraction, and trough. A common example of a severe contraction phase is the economic downturn during the Great Depression in the 1930s.

Answer 2

The most accurate statement about business cycles is that they include seasonal fluctuations within a year, but longer-term business cycles consist of four phases and do not have a predictable interval. Business cycles are identified by the NBER and are fundamental to studying the economic history of the United States, which experiences cycles of recessions and expansions.

Step-by-step explanation:

Among the statements provided about business cycles in the United States, the most accurate is that 'Seasonal business cycles occur within a year.' This is true as business cycles do include seasonal fluctuations which are part of the typical yearly cycle of economic activity. However, when looking at longer-term business cycles, the statement that is generally accurate for the broader concept is different.

Business cycles consist of four main phases: expansion, peak, contraction, and trough, not just 'boom and bust.' Moreover, these cycles do not occur at predictable intervals such as 'precisely every five years,' and although they are not perfectly predictable, they are certainly not 'impossible to identify.' The National Bureau of Economic Research (NBER) tracks and identifies these cycles, which involve periods of economic growth and contraction over time, and are influenced by various economic factors. The cycles are a reflection of the complex dynamics of an economy, rather than a simple oscillation between two states or a fixed time pattern.

Understanding business cycles is crucial for analyzing the economic history of the United States, which includes recessions and expansions. These are not regular or exact in their occurrence, but rather are influenced by a myriad of factors that cause economic growth to differ year by year. The causes for these fluctuations are studied through models like the aggregate demand-aggregate supply model.