Question

15

c. Seasonal variations and long-run trends complicate the measurement of the business cycle because

• the seasons vary so the changes are not consistent.

• long-term trends have only recently been measured.

• it is difficult to treat all the variations the same when the causes differ.

• normal seasonal variations do not signal boom or recession.

d. The business cycle affects output and employment in capital goods industries and consumer durable goods industries more severely than in industries producing consumer nondurables because capital goods and durable goods

• last, so these purchases cannot be postponed.

• last, so these purchases can be postponed.

• are expensive and require regular payments.

• do not last, so these purchases cannot be postponed.

b. The length of a complete business cycle

• has lengthened and then shortened in the past 25 years.

• varies from about 1 to 2 years to as long as 5 years.

• varies from about 2 to 3 years to as long as 15 years.

• is generally about 3 years.

Answer 1

Ans. 1- Seasonal variations and long-run trends complicate the measurement of the business cycle because normal seasonal variations do not signal boom or recession.

Ans.2- The business cycle affects output and employment in capital goods industries and consumer durable goods industries more severely than in industries producing consumer nondurables because capital goods and durable goods do not last, so these purchases cannot be postponed.

Ans.3- The length of a complete business cycle varies from about 2 to 3 years to as long as 15 years.

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