Questions: The business cycle refers to the: A. variations in the adult population of an economy. B. fluctuations in the exchange rate of an economy. C. fluctuations in the rate of output of an economy. D. deviation of unemployment from the natural rate of unemployment in an economy.

The business cycle refers to the:
A. variations in the adult population of an economy.
B. fluctuations in the exchange rate of an economy.
C. fluctuations in the rate of output of an economy.
D. deviation of unemployment from the natural rate of unemployment in an economy.

Transcript text: The business cycle refers to the: A. variations in the adult population of an economy. B. fluctuations in the exchange rate of an economy. C. fluctuations in the rate of output of an economy. D. deviation of unemployment from the natural rate of unemployment in an economy.

Solution

Answer

The answer is C. fluctuations in the rate of output of an economy.

Explanation

Option A: Variations in the adult population of an economy are not directly related to the business cycle. The business cycle focuses on economic activity, not demographic changes.

Option B: Fluctuations in the exchange rate of an economy are related to currency value changes and are influenced by various factors, including trade balances and interest rates, but they are not what defines the business cycle.

Option C: Fluctuations in the rate of output of an economy accurately describe the business cycle. The business cycle consists of periods of expansion (growth in output) and contraction (decline in output) in an economy, typically measured by changes in real GDP.

Option D: The deviation of unemployment from the natural rate of unemployment is related to economic fluctuations, but it is a consequence of the business cycle rather than a definition of it. The business cycle itself is characterized by changes in economic output.

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