Business Cycles
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Indian Economy and Indian Financial System — JAIIB.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
What is a business cycle?
A business cycle is the recurring pattern of expansion and contraction in economic activity, measured by fluctuations in real GDP, employment, and output over time.
What is the typical duration of a complete business cycle from peak to peak?
Varies from 2 to 10 years on average.
What are the four main phases of a business cycle?
The four phases are expansion (recovery), peak, contraction (recession), and trough, each reflecting different levels of economic activity.
What economic term describes two consecutive quarters of negative GDP growth?
Recession is defined by two consecutive negative GDP quarters.
What is the 'trough' phase in a business cycle?
The trough is the lowest point of a business cycle where economic activity, employment, and output reach their minimum before recovery begins.
Which phase of the business cycle is characterized by rising employment and increasing consumer confidence?
Expansion or recovery phase shows rising employment and confidence.
How does RBI use monetary policy to counter economic downturns?
RBI lowers the repo rate and reduces the Cash Reserve Ratio (CRR) during downturns to inject liquidity, encourage borrowing, and stimulate economic activity.
What is the 'contraction' phase in a business cycle?
Period of declining economic activity after the peak.
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