Business Cycle and Financial Management Quiz
Test your knowledge on recession, economic indicators, fiscal and monetary policies, and financial management goals.
#1
What is a basic characteristic of a recession in the business cycle?
A rapid increase in GDP
An increase in unemployment
A decrease in interest rates
A decrease in government spending
#2
Which of the following is an indicator of an economic boom?
Decrease in consumer spending
Increase in business bankruptcies
Increase in stock prices
Decrease in inflation rates
#3
Which economic theory suggests that individuals and firms respond to incentives by working harder?
Rational expectations theory
Keynesian economics
Monetarism
Supply-side economics
#4
Which of the following statements is true regarding a central bank's role in managing the business cycle?
Central banks control fiscal policy
Central banks regulate the money supply
Central banks determine corporate tax rates
Central banks control government spending
#5
Which of the following is a characteristic of a trough in the business cycle?
Highest level of employment
Lowest level of economic activity
Highest level of consumer spending
Lowest level of business investment
#6
What does the term 'diversification' mean in the context of financial management?
Investing in a single stock
Investing in multiple assets with different risk profiles
Investing in a mutual fund
Investing in government bonds
#7
What is the goal of financial management for a corporation?
To increase the stock price
To increase the CEO's salary
To maximize profit
To minimize tax payments
#8
What is a limitation of using the Gross Domestic Product (GDP) as an indicator of economic health?
It doesn't account for inflation
It doesn't account for government spending
It doesn't account for the informal economy
It doesn't account for imports and exports
#9
Which of the following is an example of a contractionary fiscal policy?
Increase in government spending
Decrease in taxes
Decrease in government spending
Increase in taxes
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