Bank Theory

MCQs: Business Cycle, Policies, National Income MCQs: Business Cycles Characteristics of a Business Cycle 1. Which of the following is NOT a characteristic of a business cycle? Regular and predictable pattern Involves expansion and contraction Affects all sectors equally Recurrent in nature Phases of a Business Cycle 2. The phase of business cycle which is characterized by rising employment and income is: Recession Recovery Trough Depression MCQs: Monetary & Fiscal Policy Tools of Monetary Policy 3. Which is NOT a tool of monetary policy? CRR SLR Government spending Repo rate Monetary Policy Response to Global Financial Crisis 4. During the 2008 global financial crisis, the Reserve Bank of India: Increased interest rates Cut interest rates and infused liquidity Imposed capital controls Focused on exchange rate management...

Business Cycles and Economic Policies 1. Characteristics of a Business Cycle A business cycle refers to the fluctuations in economic activity that an economy experiences over a period of time. It consists of expansions and contractions in GDP and other macroeconomic indicators. Business cycles are recurrent and periodic but not regular. They affect employment, output, income, and prices. They are global in nature, often influenced by international trade and finance. Governments use policy tools to minimize their adverse effects. 2. Phases of a Business Cycle Expansion: Increase in GDP, employment, investment, and income. Peak: Economy reaches its maximum output; inflation may rise. Recession: Decline in GDP for two consecutive quarters; rising unemployment. Trough: Lowest point in economic activity; recovery begins. Recovery: Economy begins to grow again, leading into the next expansion. Example: India...