Business cycle persistence refers to the property that
A)booms and recessions last a long time.
B)when real GDP is above trend, it tends to stay above trend, and when it is below trend, it tends to stay below trend.
C)real GDP tends to stay in the peaks and troughs of the business cycle.
D)real GDP is rarely exactly at trend.
E)business cycles are persistently hard to predict.

Question

Quizplus · Accepted Answer

Business cycle persistence refers to the tendency of an economy to stay in a boom or recession phase for an extended period. Option B correctly states that during the booms or recessions, real GDP tends to stay above or below trend, respectively, for an extended period.

Business Cycle Persistence Refers to the Property That