The defining feature of business cycles is that they are
A)fluctuations about trend in real GDP.
B)fluctuations about trend in the level of employment.
C)fluctuations about trend in the unemployment rate.
D)changes in the trend component of real GDP.
E)fluctuations about trend in standards of living.

Question

Quizplus · Accepted Answer

Business cycles are characterized by fluctuations in real GDP around its long-term trend. This means that during an expansion, real GDP increases above its trend, while during a recession, it falls below its trend. The other options listed are related to employment and the unemployment rate, but are not the defining feature of business cycles.

The Defining Feature of Business Cycles Is That They Are