ECONOMICS
BUSINESS CYCLES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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the government consistently passes stimulus money
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the government raises taxes
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both banks and government set policies to meet the three economic goals
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None of the above
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Detailed explanation-1: -The government has two tools at its disposal to moderate the short-term fluctuations of the business cycle-fiscal policy or monetary policy. Fiscal policy refers to changes in the budget deficit. Monetary policy refers to changes in short-term interest rates by the Federal Reserve.
Detailed explanation-2: -The business cycle is caused by the forces of supply and demand-the movement of the gross domestic product GDP-the availability of capital, and expectations about the future.
Detailed explanation-3: -Expansions. An expansion is the phase of the business cycle when most businesses prosper. Typically, housing and automobiles are strong sectors. Demand for housing also strengthens related industries, such as landscaping, household appliances and furniture.
Detailed explanation-4: -Recovery. After the trough, the economy moves to the stage of recovery. In this phase, there is a turnaround in the economy, and it begins to recover from the negative growth rate.